10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM                      TO

COMMISSION FILE NUMBER: 1-82

PHELPS DODGE CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

New York
(State of Incorporation) 13-1808503
(I.R.S. Employer Identification No.)

One North Central Avenue, Phoenix, AZ 85004
(Address of principal executive offices)(Zip Code)

(602) 366-8100
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ Noo

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

Number of Common Shares outstanding at October 24, 2005: 101,550,235 shares.

- i -

PHELPS DODGE CORPORATION

Quarterly Report on Form 10-Q

For the Quarter Ended September 30, 2005

Table of Contents

	Page
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Statement of Income		1
Consolidated Balance Sheet		2
Consolidated Statement of Cash Flows		3
Consolidated Statement of Shareholders’ Equity		4
Financial Data by Business Segment		5
Notes to Consolidated Financial Information		7
Review by Independent Registered Public Accounting Firm		20
Report of Independent Registered Public Accounting Firm		20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations		21
Results of Phelps Dodge Mining Company		24
Results of Phelps Dodge Industries		44
Other Matters Relating to the Consolidated Statement of Income		46
Changes in Financial Condition		48
Item 3. Quantitative and Qualitative Disclosure About Market Risk		52
Item 4. Controls and Procedures		52
Part II. Other Information
Item 1. Legal Proceedings		52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		53
Item 5. Other Information		54
Item 6. Exhibits		54
Signatures		54
Index to Exhibits		54
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.8
Exhibit 10.9
Exhibit 11
Exhibit 12
Exhibit 15
Exhibit 31
Exhibit 32

1

PHELPS DODGE CORPORATION AND SUBSIDIARIES
Part I. Financial Information

Item 1. Financial Statements

PHELPS DODGE CORPORATION

CONSOLIDATED STATEMENT OF INCOME
(Unaudited; in millions except per share data)

							Nine Months Ended
	Third Quarter						September 30,
	2005			2004			2005			2004
Sales and other operating revenues	$	2,359.8			1,846.5			6,577.9			5,094.4
Operating costs and expenses
Cost of products sold (exclusive of items shown separately below)		1,550.6			1,246.5			4,220.0			3,478.5
Depreciation, depletion and amortization		120.9			125.9			377.3			375.2
Selling and general administrative expense		48.3			42.0			136.1			114.7
Exploration and research expense		27.1			15.8			72.6			44.9
Special items and provisions, net (see Note 3)		45.0			11.1			481.3			6.4
		1,791.9			1,441.3			5,287.3			4,019.7
Operating income		567.9			405.2			1,290.6			1,074.7
Interest expense		(19.0	)		(29.2	)		(66.1	)		(100.5	)
Capitalized interest		7.0			0.3			9.9			0.6
Early debt extinguishment costs		(54.0	)		—			(54.0	)		(37.6	)
Gain on sale of cost-basis investment (see Note 3)		—			—			438.4			—
Change in interest gain from Cerro Verde stock issuance (see Note 3)		—			—			159.5			—
Miscellaneous income and expense, net		24.2			21.6			86.7			25.1
Income before taxes, minority interests in consolidated subsidiaries and equity in net earnings (losses) of affiliated companies		526.1			397.9			1,865.0			962.3
Provision for taxes on income (see Note 8)		(108.6	)		(62.2	)		(314.4	)		(109.1	)
Minority interests in consolidated subsidiaries		(51.9	)		(43.4	)		(117.4	)		(149.0	)
Equity in net earnings (losses) of affiliated companies		0.5			0.6			1.9			1.0
Net income		366.1			292.9			1,435.1			705.2
Preferred stock dividends		—			(3.3	)		(6.8	)		(10.1	)
Net income applicable to common shares	$	366.1			289.6			1,428.3			695.1
Weighted average number of common shares outstanding — basic		98.6			93.8			96.8			92.8
Basic earnings per common share	$	3.71			3.09			14.75			7.49
Weighted average number of common shares outstanding — diluted		101.4			99.4			101.1			98.6
Diluted earnings per common share	$	3.61			2.95			14.19			7.15

See Notes to Consolidated Financial Information.

  2

PHELPS DODGE CORPORATION

CONSOLIDATED BALANCE SHEET
(Unaudited; in millions except per share prices)

	September 30,			December 31,
	2005			2004
Assets
Current assets:
Cash and cash equivalents	$	2,416.2			1,200.1
Restricted cash		89.1			—
Accounts receivable, less allowance for doubtful accounts (2005 — $15.7; 2004 — $17.4)		1,085.6			761.5
Mill and leach stockpiles		25.6			26.2
Inventories		461.9			392.1
Supplies		212.2			192.7
Prepaid expenses and other current assets		109.5			46.0
Deferred income taxes		79.2			43.1
Current assets		4,479.3			2,661.7
Investments and long-term receivables		129.3			120.7
Property, plant and equipment, net		5,019.7			5,318.9
Long-term mill and leach stockpiles		140.9			131.0
Deferred income taxes		45.3			61.8
Goodwill		115.0			103.5
Intangible assets, net		7.6			5.3
Other assets and deferred charges		304.9			191.2
	$	10,242.0			8,594.1
Liabilities
Current liabilities:
Short-term debt	$	31.1			78.8
Current portion of long-term debt		43.0			45.9
Accounts payable and accrued expenses		1,292.1			972.1
Dividends payable		—			3.4
Accrued income taxes		29.3			67.8
Current liabilities		1,395.5			1,168.0
Long-term debt		656.6			972.2
Deferred income taxes		469.8			448.4
Other liabilities and deferred credits		998.8			1,107.3
		3,520.7			3,695.9
Commitments and contingencies (see Notes 5, 6 and 8)
Minority interests in consolidated subsidiaries		897.0			555.1
Shareholders’ equity
Common shares, par value $6.25; 300.0 shares authorized; 101.5 outstanding (2004 — 95.9) after deducting 8.5 shares (2004 — 9.9) held in treasury, at cost		634.4			599.5
Cumulative preferred shares, par value $1.00; 6.0 shares authorized; 2.0 outstanding in 2004		—			2.0
Capital in excess of par value		1,985.9			1,906.4
Retained earnings		3,583.4			2,239.9
Accumulated other comprehensive loss		(343.2	)		(384.2	)
Other		(36.2	)		(20.5	)
		5,824.3			4,343.1
	$	10,242.0			8,594.1

See Notes to Consolidated Financial Information

  3

PHELPS DODGE CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited; in millions)

	Nine Months Ended
	September 30,
	2005			2004
Operating activities
Net income	$	1,435.1			705.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		377.3			375.2
Deferred income tax provision (benefit)		(3.9	)		6.5
Equity in net earnings (losses) of affiliated companies, net of dividends received		0.3			2.2
Gain on sale of cost-basis investment		(438.4	)		—
Change in interest gain from Cerro Verde stock issuance		(159.5	)		—
Special items and provisions		481.3			7.8
Early debt extinguishment costs		54.0			37.6
Minority interests in consolidated subsidiaries		117.4			149.0
Changes in current assets and liabilities:
Accounts receivable		(240.1	)		(257.9	)
Repayment of securitized accounts receivable		(85.0	)		—
Mill and leach stockpiles		0.5			4.8
Inventories		(69.4	)		(10.4	)
Supplies		(26.1	)		(11.8	)
Prepaid expenses and other current assets		(54.6	)		(20.6	)
Interest payable		4.6			16.4
Other accounts payable		71.3			134.3
Accrued income taxes		(18.4	)		5.0
Other accrued expenses		164.1			(8.0	)
Pension plan contributions		(250.0	)		(85.4	)
Other operating, net		(61.4	)		54.0
Net cash provided by operating activities		1,299.1			1,103.9
Investing activities
Capital outlays		(392.5	)		(160.0	)
Capitalized interest		(9.9	)		(0.6	)
Investments in subsidiaries and other, net of cash received and acquired		(11.2	)		(0.2	)
Proceeds from asset dispositions		6.2			18.9
Proceeds from sale of cost-basis investment		451.6			—
Restricted cash		(89.1	)		—
Other investing, net		(2.3	)		(0.6	)
Net cash used in investing activities		(47.2	)		(142.5	)
Financing activities
Proceeds from issuance of debt		—			150.0
Payment of debt		(362.5	)		(718.1	)
Common dividends		(84.8	)		(23.6	)
Preferred dividends		(10.1	)		(10.1	)
Issuance of shares, net		52.4			254.0
Debt issue costs		(5.8	)		(7.3	)
Proceeds from issuance of Cerro Verde stock		441.8			—
Other financing, net		(84.2	)		(57.4	)
Net cash used in financing activities		(53.2	)		(412.5	)
Effect of exchange rate impact on cash and cash equivalents		17.4			8.2
Increase in cash and cash equivalents		1,216.1			557.1
Increase at beginning of 2004 from consolidating El Abra and Candelaria		—			28.3
Cash and cash equivalents at beginning of period		1,200.1			683.8
Cash and cash equivalents at end of period	$	2,416.2			1,269.2

See Notes to Consolidated Financial Information.

  4

PHELPS DODGE CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited; in millions)

																		Accumulated
	Common Shares					Preferred Shares						Capital in						Other
	Number		At Par			Number			At Par			Excess of			Retained			Comprehensive						Shareholders’
	of Shares		Value			of Shares			Value			Par Value			Earnings			Income (Loss)*			Other			Equity
Balance at December 31, 2004		95.9	$	599.5			2.0		$	2.0		$	1,906.4		$	2,239.9		$	(384.2	)	$	(20.5	)	$	4,343.1
Stock options exercised		1.2		7.6									83.7												91.3
Restricted shares issued/cancelled, net		0.2		1.5									23.2									(15.7	)		9.0
Common shares purchased		—		(0.2	)								(3.4	)											(3.6	)
Preferred shares conversions		4.2		26.0			(2.0	)		(2.0	)		(24.0	)											—
Dividends on preferred shares																(6.8	)								(6.8	)
Dividends on common shares																(84.8	)								(84.8	)
Comprehensive income (loss):
Net income																1,435.1									1,435.1
Other comprehensive income, net of tax:
Translation adjustment																			11.0						11.0
Net gain on derivative instruments																			1.8						1.8
Other investment adjustments																			0.5						0.5
Unrealized gains on securities																			15.9						15.9
Minimum pension liability																			11.8						11.8
Other comprehensive income																			41.0						41.0
Comprehensive income																									1,476.1
Balance at September 30, 2005		101.5	$	634.4		$	—		$	—		$	1,985.9		$	3,583.4		$	(343.2	)	$	(36.2	)	$	5,824.3

* As of September 30, 2005, this balance comprised $(217.8) million of cumulative minimum pension liability adjustments, $(160.8) million of cumulative translation adjustments and $(0.2) million of cumulative other investment adjustments; partially offset by $32.7 million of cumulative unrealized gains on securities and $2.9 million of cumulative unrealized gains on derivative instruments.

See Notes to Consolidated Financial Information.

  5

FINANCIAL DATA BY BUSINESS SEGMENT
(Unaudited; $ in millions)

	U.S. Mines																	South American Mines
																		Candelaria/
									Miami/			Chino/						Ojos del			Cerro						Primary
	Morenci			Bagdad		Sierrita			Bisbee			Cobre			Tyrone			Salado			Verde			El Abra			Molybdenum
Third Quarter 2005
Sales and other operating revenues:
Unaffiliated customers	$	—			—		6.9			—			8.2			—			133.6			14.2			78.1			468.0
Intersegment		283.0			180.1		223.4			10.4			79.1			31.8			59.5			80.1			80.8			—
Depreciation, depletion and amortization		15.7			7.6		3.5			1.1			5.1			0.2			9.6			7.0			28.6			9.7
Operating income (loss) before special items and provisions		128.2			112.4		153.9			1.5			18.6			3.0			73.1			55.8			52.6			71.9
Special items and provisions, net		0.4			—		(8.6	)		(0.1	)		—			—			—			—			—			—
Operating income (loss)		128.6			112.4		145.3			1.4			18.6			3.0			73.1			55.8			52.6			71.9
Interest income		0.1			—		—			—			0.6			—			2.6			2.6			0.8			0.2
Interest expense, net		—			—		—			—			—			—			0.1			4.9			(0.5	)		—
Provision for taxes on income		—			—		—			—			—			—			(13.0	)		(15.7	)		(18.0	)		—
Minority interests in consolidated subsidiaries		—			—		—			—			—			—			(9.5	)		(23.8	)		(16.6	)		—
Equity in net earnings (losses) of affiliated companies		—			—		—			(0.2	)		—			—			—			—			—			—
Equity basis investments at September 30		—			—		0.2			0.7			—			—			0.3			—			—			—
Assets at September 30		918.3			446.0		328.5			97.4			429.8			73.2			1,041.4			913.8			1,003.2			934.9
Expenditures for segment assets		16.1			10.6		5.0			0.1			2.9			2.7			4.6			106.7			6.4			18.1
Third Quarter 2004*
Sales and other operating revenues:
Unaffiliated customers	$	—			—		5.7			—			0.1			—			130.4			31.8			88.6			267.1
Intersegment		238.5			123.6		146.4			9.7			75.5			29.2			41.8			35.2			58.0			—
Depreciation, depletion and amortization		19.5			6.7		3.5			1.4			4.6			3.0			12.3			8.1			29.4			7.7
Operating income (loss) before special items and provisions		100.5			57.6		82.0			(0.7	)		16.9			8.7			77.2			32.5			63.3			17.3
Special items and provisions, net		(0.1	)		—		—			(0.1	)		(0.2	)		(1.5	)		—			—			—			—
Operating income (loss)		100.4			57.6		82.0			(0.8	)		16.7			7.2			77.2			32.5			63.3			17.3
Interest income		—			—		—			—			0.3			—			0.1			0.4			0.3			0.1
Interest expense, net		—			—		—			—			—			—			—			(0.2	)		(4.4	)		—
Provision for taxes on income		—			—		—			—			—			—			(11.8	)		(11.8	)		(6.6	)		—
Minority interests in consolidated subsidiaries		—			—		—			—			—			—			(12.4	)		(3.9	)		(25.6	)		—
Equity in net earnings (losses) of affiliated companies		—			—		—			—			—			—			—			—			—			—
Equity basis investments at September 30		—			—		0.2			1.0			—			—			0.3			—			—			—
Assets at September 30		944.0			435.2		307.3			104.8			431.1			176.4			807.6			524.0			1,143.4			826.3
Expenditures for segment assets		7.5			6.0		8.8			0.8			2.4			4.5			3.0			2.2			3.1			3.8

													PDMC															Corporate,
	Manufac-						PDMC						Elimi-			PDMC			Specialty			Wire &			PDI			Other &
	turing			Sales			Segments			Other			nations			Subtotal			Chemicals			Cable			Subtotal			Eliminations			Totals
Third Quarter 2005
Sales and other operating revenues:
Unaffiliated customers	$	894.2			249.2			1,852.4			7.3			—			1,859.7			180.8			319.3			500.1			—			2,359.8
Intersegment		30.6			77.3			1,136.1			20.3			(1,077.3	)		79.1			—			0.3			0.3			(79.4	)		—
Depreciation, depletion and amortization		11.2			—			99.3			1.5			—			100.8			11.4			7.0			18.4			1.7			120.9
Operating income (loss) before special items and provisions		0.2			2.3			673.5			(46.6	)		—			626.9			7.6			11.2			18.8			(32.8	)		612.9
Special items and provisions, net		0.1			—			(8.2	)		(0.3	)		—			(8.5	)		—			(1.8	)		(1.8	)		(34.7	)		(45.0	)
Operating income (loss)		0.3			2.3			665.3			(46.9	)		—			618.4			7.6			9.4			17.0			(67.5	)		567.9
Interest income		—			0.1			7.0			0.7			(0.7	)		7.0			4.4			0.5			4.9			11.7			23.6
Interest expense, net		(0.8	)		(0.2	)		3.5			0.2			0.7			4.4			(3.2	)		(1.9	)		(5.1	)		(11.3	)		(12.0	)
Provision for taxes on income		—			—			(46.7	)		—			—			(46.7	)		—			—			—			(61.9	)		(108.6	)
Minority interests in consolidated subsidiaries		—			—			(49.9	)		0.1			—			(49.8	)		(0.3	)		(1.8	)		(2.1	)		—			(51.9	)
Equity in net earnings (losses) of affiliated companies		—			—			(0.2	)		—			—			(0.2	)		—			0.2			0.2			0.5			0.5
Equity basis investments at September 30		—			—			1.2			0.2			—			1.4			—			6.4			6.4			23.8			31.6
Assets at September 30		330.6			36.7			6,553.8			1,366.1			(1,456.9	)		6,463.0			828.5			686.9			1,515.4			2,263.6			10,242.0
Expenditures for segment assets		5.0			—			178.2			24.4			(0.5	)		202.1			12.3			4.7			17.0			5.0			224.1
Third Quarter 2004*
Sales and other operating revenues:
Unaffiliated customers	$	657.5			233.0			1,414.2			6.1			—			1,420.3			171.1			255.1			426.2			—			1,846.5
Intersegment		50.2			52.5			860.6			18.5			(824.6	)		54.5			—			0.3			0.3			(54.8	)		—
Depreciation, depletion and amortization		6.0			—			102.2			1.1			—			103.3			12.1			8.9			21.0			1.6			125.9
Operating income (loss) before special items and provisions		8.6			1.6			465.5			(34.2	)		—			431.3			5.1			10.7			15.8			(30.8	)		416.3
Special items and provisions, net		(3.1	)		—			(5.0	)		(2.9	)		—			(7.9	)		—			(3.3	)		(3.3	)		0.1			(11.1	)
Operating income (loss)		5.5			1.6			460.5			(37.1	)		—			423.4			5.1			7.4			12.5			(30.7	)		405.2
Interest income		—			—			1.2			1.1			(1.0	)		1.3			2.5			0.2			2.7			1.5			5.5
Interest expense, net		(1.0	)		—			(5.6	)		—			1.0			(4.6	)		(3.8	)		(1.5	)		(5.3	)		(19.0	)		(28.9	)
Provision for taxes on income		—			—			(30.2	)		—			—			(30.2	)		—			—			—			(32.0	)		(62.2	)
Minority interests in consolidated subsidiaries		—			—			(41.9	)		—			—			(41.9	)		—			(1.5	)		(1.5	)		—			(43.4	)
Equity in net earnings (losses) of affiliated companies		—			—			—			—			—			—			—			—			—			0.6			0.6
Equity basis investments at September 30		—			—			1.5			—			—			1.5			—			5.5			5.5			24.1			31.1
Assets at September 30		473.5			12.4			6,186.0			1,288.5			(1,381.1	)		6,093.4			789.8			593.8			1,383.6			1,064.9			8,541.9
Expenditures for segment assets		2.0			0.1			44.2			5.1			(0.3	)		49.0			8.9			5.2			14.1			0.5			63.6

* In the 2004 fourth quarter, the Company reassessed its reportable segments. The reassessment considered the significant increase in copper and molybdenum prices. Based on our assessment, we are separately disclosing Bagdad, Sierrita, Manufacturing and Sales as individual reportable segments, whereas, in 2004 Bagdad and Sierrita, and Manufacturing and Sales were aggregated. Segment information for 2004 has been revised to conform with the 2005 presentation.

  6

FINANCIAL DATA BY BUSINESS SEGMENT
(Unaudited; $ in millions)

	U.S. Mines																	South American Mines
																		Candelaria/
									Miami/			Chino/						Ojos del			Cerro						Primary
	Morenci			Bagdad		Sierrita			Bisbee			Cobre			Tyrone			Salado			Verde			El Abra			Molybdenum
Nine Months Ended September 30, 2005
Sales and other operating revenues:
Unaffiliated customers	$	—			—		12.2			—			14.0			—			356.0			47.5			238.5			1,470.9
Intersegment		773.3			526.8		635.3			30.5			243.6			94.6			155.1			196.2			233.8			—
Depreciation, depletion and amortization		46.9			23.3		11.2			3.3			15.5			7.2			28.8			20.2			90.1			31.6
Operating income (loss) before special items and provisions		328.9			313.3		424.0			4.7			49.2			7.5			213.1			131.4			160.9			257.4
Special items and provisions, net		(0.2	)		—		(8.6	)		(0.1	)		(64.5	)		(215.7	)		—			—			—			—
Operating income (loss)		328.7			313.3		415.4			4.6			(15.3	)		(208.2	)		213.1			131.4			160.9			257.4
Interest income		0.1			—		—			—			1.6			—			4.8			4.9			1.2			0.4
Interest expense, net		—			—		—			—			—			—			0.2			6.6			(5.0	)		—
Gain on sale of cost-basis investment		—			—		—			—			—			—			—			—			—			87.2
Change in interest gain from Cerro Verde stock issuance		—			—		—			—			—			—			—			159.5			—			—
Provision for taxes on income		—			—		—			—			—			—			(42.1	)		(11.5	)		(56.4	)		—
Minority interests in consolidated subsidiaries		—			—		—			—			—			—			(25.9	)		(38.8	)		(48.3	)		—
Equity in net earnings (losses) of affiliated companies		—			—		—			(0.4	)		—			—			—			—			—			—
Equity basis investments at September 30		—			—		0.2			0.7			—			—			0.3			—			—			—
Assets at September 30		918.3			446.0		328.5			97.4			429.8			73.2			1,041.4			913.8			1,003.2			934.9
Expenditures for segment assets		23.0			21.9		11.6			0.1			11.9			4.5			12.5			178.1			15.8			25.1
Nine Months Ended September 30, 2004*
Sales and other operating revenues:
Unaffiliated customers	$	—			—		5.7			—			0.3			—			312.0			76.4			284.9			642.2
Intersegment		669.0			276.3		366.0			21.1			158.1			82.2			158.6			120.3			198.3			—
Depreciation, depletion and amortization		56.8			18.0		9.4			3.8			9.9			9.0			37.7			24.4			91.9			22.9
Operating income (loss) before special items and provisions		265.3			103.8		182.1			(4.5	)		42.3			19.5			195.3			95.4			202.5			62.4
Special items and provisions, net		(0.5	)		—		—			(0.1	)		(0.6	)		(3.3	)		—			—			—			0.3
Operating income (loss)		264.8			103.8		182.1			(4.6	)		41.7			16.2			195.3			95.4			202.5			62.7
Interest income		—			—		—			—			0.8			—			0.8			0.6			0.5			0.2
Interest expense, net		—			—		—			—			—			—			(6.3	)		(2.0	)		(13.2	)		—
Provision for taxes on income		—			—		—			—			—			—			(34.8	)		(34.4	)		25.1			—
Minority interests in consolidated subsidiaries		—			—		—			—			—			—			(28.6	)		(11.8	)		(105.2	)		—
Equity in net earnings (losses) of affiliated companies		—			—		(0.1	)		—			—			—			—			—			—			—
Equity basis investments at September 30		—			—		0.2			1.0			—			—			0.3			—			—			—
Assets at September 30		944.0			435.2		307.3			104.8			431.1			176.4			807.6			524.0			1,143.4			826.3
Expenditures for segment assets		14.5			10.7		16.0			1.0			8.5			6.7			13.3			4.0			5.7			9.9

													PDMC															Corporate,
	Manufac-						PDMC						Elimi-			PDMC			Specialty			Wire &			PDI			Other &
	turing			Sales			Segments			Other			nations			Subtotal			Chemicals			Cable			Subtotal			Eliminations			Totals
Nine Months Ended September 30, 2005
Sales and other operating revenues:
Unaffiliated customers	$	2,316.6			687.5			5,143.2			19.0			—			5,162.2			546.4			869.3			1,415.7			—			6,577.9
Intersegment		136.4			195.9			3,221.5			60.3			(3,080.9	)		200.9			—			0.7			0.7			(201.6	)		—
Depreciation, depletion and amortization		23.7			—			301.8			4.3			—			306.1			43.4			22.7			66.1			5.1			377.3
Operating income (loss) before special items and provisions		11.2			1.8			1,903.4			(100.5	)		—			1,802.9			29.7			30.0			59.7			(90.7	)		1,771.9
Special items and provisions, net		(148.6	)		—			(437.7	)		8.3			—			(429.4	)		—			(3.3	)		(3.3	)		(48.6	)		(481.3	)
Operating income (loss)		(137.4	)		1.8			1,465.7			(92.2	)		—			1,373.5			29.7			26.7			56.4			(139.3	)		1,290.6
Interest income		—			0.1			13.1			2.7			(2.3	)		13.5			12.0			1.2			13.2			22.4			49.1
Interest expense, net		(2.3	)		(0.7	)		(1.2	)		0.1			2.3			1.2			(9.9	)		(5.8	)		(15.7	)		(41.7	)		(56.2	)
Gain on sale of cost-basis investment		—			—			87.2			351.2			—			438.4			—			—			—			—			438.4
Change in interest gain from Cerro Verde stock issuance		—			—			159.5			—			—			159.5			—			—			—			—			159.5
Provision for taxes on income		—			—			(110.0	)		—			—			(110.0	)		—			—			—			(204.4	)		(314.4	)
Minority interests in consolidated subsidiaries		—			—			(113.0	)		0.1			—			(112.9	)		(0.9	)		(3.6	)		(4.5	)		—			(117.4	)
Equity in net earnings (losses) of affiliated companies		—			—			(0.4	)		(0.3	)		—			(0.7	)		—			1.0			1.0			1.6			1.9
Equity basis investments at September 30		—			—			1.2			0.2			—			1.4			—			6.4			6.4			23.8			31.6
Assets at September 30		330.6			36.7			6,553.8			1,366.1			(1,456.9	)		6,463.0			828.5			686.9			1,515.4			2,263.6			10,242.0
Expenditures for segment assets		14.4			—			318.9			67.3			(27.1	)		359.1			22.6			12.0			34.6			10.0			403.7
Nine Months Ended September 30, 2004*
Sales and other operating revenues:
Unaffiliated customers	$	1,863.3			687.8			3,872.6			16.7			—			3,889.3			500.2			704.9			1,205.1			—			5,094.4
Intersegment		166.5			154.6			2,371.0			51.9			(2,258.3	)		164.6			—			0.4			0.4			(165.0	)		—
Depreciation, depletion and amortization		16.8			—			300.6			3.3			—			303.9			37.0			27.0			64.0			7.3			375.2
Operating income (loss) before special items and provisions		20.1			2.8			1,187.0			(86.3	)		—			1,100.7			32.2			23.6			55.8			(75.4	)		1,081.1
Special items and provisions, net		(3.1	)		—			(7.3	)		(3.1	)		—			(10.4	)		—			(7.6	)		(7.6	)		11.6			(6.4	)
Operating income (loss)		17.0			2.8			1,179.7			(89.4	)		—			1,090.3			32.2			16.0			48.2			(63.8	)		1,074.7
Interest income		—			—			2.9			3.7			(3.1	)		3.5			6.7			0.6			7.3			2.7			13.5
Interest expense, net		(3.1	)		(0.3	)		(24.9	)		—			3.1			(21.8	)		(11.3	)		(3.9	)		(15.2	)		(62.9	)		(99.9	)
Provision for taxes on income		—			—			(44.1	)		—			—			(44.1	)		—			—			—			(65.0	)		(109.1	)
Minority interests in consolidated subsidiaries		—			—			(145.6	)		—			—			(145.6	)		(0.5	)		(2.9	)		(3.4	)		—			(149.0	)
Equity in net earnings (losses) of affiliated companies		—			—			(0.1	)		(0.9	)		—			(1.0	)		—			0.3			0.3			1.7			1.0
Equity basis investments at September 30		—			—			1.5			—			—			1.5			—			5.5			5.5			24.1			31.1
Assets at September 30		473.5			12.4			6,186.0			1,288.5			(1,381.1	)		6,093.4			789.8			593.8			1,383.6			1,064.9			8,541.9
Expenditures for segment assets		8.2			0.1			98.6			18.1			(1.2	)		115.5			14.7			19.1			33.8			10.9			160.2

* In the 2004 fourth quarter, the Company reassessed its reportable segments. The reassessment considered the significant increase in copper and molybdenum prices. Based on our assessment, we are separately disclosing Bagdad, Sierrita, Manufacturing and Sales as individual reportable segments, whereas, in 2004 Bagdad and Sierrita, and Manufacturing and Sales were aggregated. Segment information for 2004 has been revised to conform with the 2005 presentation.

  7

NOTES TO CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)

1. General Information

     The unaudited consolidated financial information of Phelps Dodge Corporation (the Company, which may be referred to as Phelps Dodge, PD, we, us or ours) presented herein has been prepared in accordance with the instructions to Form 10-Q and does not include all of the information and note disclosures required by U.S. generally accepted accounting principles (GAAP). Therefore, this information should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2004. This information reflects all adjustments that are, in the opinion of management, necessary to a fair statement of the results for the interim periods reported.

     In accordance with Financial Accounting Standards Board (FASB) Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,” (FIN 46) and the revised Interpretation (FIN 46-R), beginning January 1, 2004, we fully consolidated the results of operations for the El Abra and Candelaria mines in Chile, in which we hold 51 percent and 80 percent partnership interests, respectively, with the interest held by our minority shareholders reported as “minority interests in consolidated subsidiaries” in our Consolidated Balance Sheet and Consolidated Statement of Income. Other investments in undivided interests and unincorporated mining joint ventures that are limited to the extraction of minerals are accounted for using the proportional consolidation method. These investments include the Morenci mine, located in Arizona, in which we hold an 85 percent undivided interest. Interests in other majority-owned subsidiaries are reported using the full consolidation method; the Consolidated Financial Statements include 100 percent of the assets and liabilities of these subsidiaries and the ownership interests of minority participants are recorded as “minority interests in consolidated subsidiaries.” All material inter-company balances and transactions are eliminated.

     For comparative purposes, certain amounts for the quarter and nine months ended September 30, 2004, have been reclassified to conform with current period presentation.

     Our business consists of two divisions, Phelps Dodge Mining Company (PDMC) and Phelps Dodge Industries (PDI). The results of operations for the quarter and nine-month periods ended September 30, 2005, are not necessarily indicative of the results to be expected for the full year.

2. Stock Compensation

     We account for our stock option plans by measuring compensation cost using the intrinsic-value-based method presented by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. No compensation cost has been reflected in consolidated net income, as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following tables present the effect on net income and earnings per common share as if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” to compensation cost.

(Unaudited; $ in millions except per share data)

	Third Quarter
	2005			2004
Net income as reported	$	366.1			292.9
Deduct:
Total compensation cost determined under fair value based method for all awards, net of tax		(0.5	)		(1.7	)
Pro forma net income	$	365.6			291.2
Earnings per common share
Basic — as reported	$	3.71			3.09
Basic — pro forma	$	3.71			3.07
Earnings per common share
Diluted — as reported	$	3.61			2.95
Diluted — pro forma	$	3.61			2.93

(Unaudited; $ in millions except per share data)

	Nine Months Ended
	September 30,
	2005			2004
Net income as reported	$	1,435.1			705.2
Deduct:
Total compensation cost determined under fair value based method for all awards, net of tax		(2.4	)		(5.1	)
Pro forma net income	$	1,432.7			700.1
Earnings per common share
Basic — as reported	$	14.75			7.49
Basic — pro forma	$	14.72			7.43
Earnings per common share
Diluted — as reported	$	14.19			7.15
Diluted — pro forma	$	14.18			7.11

  8

3. Special Items and Provisions

     Special items and provisions are unpredictable and atypical of the Company’s operations in a given period. This supplemental information is not a substitute for any U.S. GAAP measure and should be evaluated within the context of our U.S. GAAP results. The tax impacts of the special items were determined at the marginal effective tax rate of the appropriate taxing jurisdiction, including provision for a valuation allowance, if warranted. (All references to per share earnings or losses are based on diluted earnings or losses per share.)

Note: Supplemental Data

     The following schedules summarize the special items and provisions for the quarter and nine months ended September 30, 2005:

(Unaudited; $ in millions except per share amounts)

	2005 Third Quarter
							$/Share
Consolidated Statement of Income Line Item	Pre-tax			After-tax			After-tax
Special items and provisions, net:
PDMC —
Environmental provisions, net	$	(8.7	)		(6.7	)		(0.07	)
Environmental insurance recoveries, net		(0.1	)		—			—
Historical legal matters		0.3			0.2			—
		(8.5	)		(6.5	)		(0.07	)
PDI —
Environmental provisions, net		(0.1	)		(0.1	)		—
Wire and Cable restructuring programs/closures		0.3			0.3			—
Asset impairment charges		(2.0	)		(1.6	)		(0.01	)
		(1.8	)		(1.4	)		(0.01	)
Corporate and Other —
Environmental provisions, net		(34.4	)		(26.3	)		(0.26	)
Environmental insurance recoveries, net		0.1			—			—
Historical legal matters		(0.4	)		(0.3	)		—
		(34.7	)		(26.6	)		(0.26	)
		(45.0	)		(34.5	)		(0.34	)
Early debt extinguishment costs		(54.0	)		(41.3	)		(0.41	)
	$	(99.0	)		(75.8	)		(0.75	)

     For the quarter and nine months ended September 30, 2005, net charges for environmental provisions of $43.2 million and $78.6 million ($33.1 million and $60.0 million after-tax), respectively, were recognized for closed facilities and closed portions of operating facilities. (Refer to Note 5, Environmental, and Reclamation and Closure Matters, for further discussion of environmental matters.)

     For the quarter and nine months ended September 30, 2005, a pre-tax net gain of $0.3 million and a net charge of $0.8 million ($0.3 million and net zero after-tax), respectively, were recognized for Phelps Dodge Magnet Wire’s restructuring programs and facility closures. (Refer to the Company’s Form 10-K for the year ended December 31, 2004, for additional discussion.)

     For the quarter and nine months ended September 30, 2005, Phelps Dodge Magnet Wire recorded special, pre-tax charges of $2.0 million and $2.4 million ($1.6 million and $1.9 million after-tax), respectively, for asset impairments. These included an impairment charge of $2.0 million ($1.6 million after-tax) in the 2005 third quarter at our El Paso, Texas, magnet wire facility, and $0.4 million ($0.3 million after-tax) in the 2005 second quarter at our Laurinburg, North Carolina, magnet wire facility. The amount of the asset impairments were determined through a fair market value based on an assessment of projected cash flows.

     For the quarter and nine months ended September 30, 2005, a pre-tax net charge of $0.1 million and a net gain of $19.6 million ($0.1 million charge and a $15.7 million gain after-tax), respectively, were recognized for legal matters. The nine-month total included $14.8 million ($11.2 million after-tax) of net settlements on historical legal matters, a $3.6 million (before and after taxes) adjustment related to an historical Cyprus Amax Minerals Company lawsuit and a net settlement of $1.2 million ($0.9 million after-tax) reached with one of our insurance carriers associated with potential future legal matters.

     In the 2005 third quarter, we recognized a charge of $54.0 million ($41.3 million after-tax) for early debt extinguishment costs. (Refer to Note 11, Debt and Other Financing, for further discussion.)

(Unaudited; $ in millions except per share amounts)

	Nine Months Ended
	September 30, 2005
Consolidated Statement of Income							$/Share
Line Item	Pre-tax			After-tax			After-tax
Special items and provisions, net:
PDMC —
Asset impairment charges	$	(419.1	)		(320.9	)		(3.17	)
Environmental provisions, net		(24.4	)		(18.6	)		(0.18	)
Environmental insurance recoveries, net		(1.2	)		(0.9	)		(0.01	)
Historical legal matters		15.3			11.6			0.11
		(429.4	)		(328.8	)		(3.25	)
PDI —
Environmental provisions, net		(0.1	)		(0.1	)		—
Wire and Cable restructuring programs/closures		(0.8	)		—			—
Asset impairment charges		(2.4	)		(1.9	)		(0.02	)
		(3.3	)		(2.0	)		(0.02	)
Corporate and Other —
Environmental provisions, net		(54.1	)		(41.3	)		(0.41	)
Environmental insurance recoveries, net		1.2			0.9			0.01
Historical legal matters		4.3			4.1			0.04
		(48.6	)		(36.3	)		(0.36	)
		(481.3	)		(367.1	)		(3.63	)
Early debt extinguishment costs		(54.0	)		(41.3	)		(0.41	)
Gain on sale of cost-basis investment		438.4			388.0			3.84
Change in interest gain from Cerro Verde stock issuance		159.5			172.9			1.71
Provision for taxes on income:
Foreign dividend tax		—			(2.4	)		(0.03	)
	$	62.6			150.1			1.48

     In the 2005 second quarter, PDMC recorded special, pre-tax charges for asset impairments of $419.1 million ($320.9 million after-tax) at the Tyrone and Cobre mines, Chino smelter and Miami refinery. On June 1, 2005, the Company’s board of directors

  9

approved expenditures of $210 million to construct a concentrate-leach, direct-electrowinning facility at the Morenci copper mine, and to restart its concentrator, which has been idle since 2001. The new facility will employ proprietary technology that has been developed and is under demonstration at the Bagdad copper mine, and is expected to begin operations in 2007. Concentrate leaching technology, in conjunction with a conventional milling and flotation concentrator, allows copper sulfide ores to be transformed into copper cathode through a pressure leaching and electrowinning process instead of smelting and refining. Historically, sulfide ores have been processed into copper anodes through a smelter. This decision had consequences for several of our other southwest copper operations, resulting in the impairment of certain assets.

     With future Morenci copper concentrate production being fed into the concentrate leach facility, the operating smelter in Miami, Arizona, will be sufficient to treat virtually all remaining concentrate expected to be produced by Phelps Dodge at our operations in the southwestern United States. Accordingly, the Chino smelter located near Silver City, New Mexico, which has been on care-and-maintenance status since 2002, will be closed. With the closing of the Chino smelter, we will have unnecessary refining capacity in the region. Because of its superior capacity and operating flexibility, our refinery in El Paso, Texas, will continue to operate. The El Paso refinery is over twice the size of our refinery in Miami, Arizona, and has sufficient capacity to refine all anodes expected to be produced from our operations in the southwestern United States given the changes brought about by the Morenci project. Accordingly, the Miami refinery, which has been on care-and-maintenance status since 2002, also will be closed. As a result of the decision to close the Chino smelter and the Miami refinery, we recorded pre-tax asset impairment charges during the 2005 second quarter of $89.6 million ($68.6 million after-tax) and $59.1 million ($45.2 million after-tax), respectively, to reduce the related carrying values of these properties to their respective salvage values.

     The steps being taken at Morenci also will impact our Tyrone and Cobre mines in New Mexico. The Tyrone mine has been partially curtailed since 2003, while activities at the Cobre mine were suspended in 1999, with the exception of limited activities. Future economics of these mines likely will be affected by significantly higher acid costs resulting from their inability to obtain low-cost acid from the Chino smelter. These factors caused Phelps Dodge to reassess the recoverability of the long-lived assets at both the Tyrone and Cobre mines. This reassessment, which was based on an analysis of cash flows associated with the related assets, indicated that the assets were not recoverable and that asset impairment charges were required.

     Tyrone’s pre-tax impairment of $210.5 million ($161.2 million after-tax) primarily resulted from fundamental changes to its life-of-mine cash flows. In addition to higher expected acid costs, we decided to accelerate reclamation of portions of stockpiles around the mine perimeter. As a result of this accelerated plan, the estimated cost associated with reclaiming the perimeter stockpiles increased. These factors increased costs and also decreased Tyrone’s copper ore reserves by approximately 155 million pounds, or 14 percent.

     Cobre’s pre-tax impairment of $59.9 million ($45.9 million after-tax) primarily resulted from projected higher acid, external smelting and freight costs as a result of the Chino smelter being permanently closed. It also reflected estimated higher restart and operating costs of running the Cobre mill, reflecting our recent experience with restarting the Chino mill. Additionally, the cost for building a tailing pipeline from Cobre to the Chino mine has increased based upon a recent detailed engineering evaluation recommending (i) extending the pipeline an additional nine miles, (ii) adding a new thickener and booster pump station, and (iii) requiring larger pipe size.

     In the 2005 second quarter, a pre-tax gain of $438.4 million ($388.0 million after-tax) was recognized from the sale of our common shares of Southern Peru Copper Corporation (SPCC). On June 9, 2005, the Company entered into an Underwriting Agreement with Citigroup Global Markets, Inc., UBS Securities LLC, SPCC, Cerro Trading Company, Inc. and SPC Investors, LLC. On June 15, 2005, pursuant to the Underwriting Agreement, the Company sold all of its SPCC common shares to the underwriters for a net purchase price of $40.635 per share (based on a market purchase price of $42.00 per share less underwriting fees).

     In the 2005 second quarter, we recognized a pre-tax gain of $159.5 million ($172.9 million after-tax) associated with the change of ownership interest in our Cerro Verde copper mine in Peru. This action resulted from the inflow of new capital for our Cerro Verde copper mine, which resulted in our ownership interest decreasing from 82.5 percent to 53.6 percent. The $13.4 million tax benefit related to this transaction included a reduction in deferred tax liabilities ($16.1 million) resulting from the recognition of certain book adjustments to reflect the dilution of our ownership interest; partially offset by taxes charged ($2.7 million) on the transfer of stock subscription rights to Compañia de Minas Buenaventura S.A.A. (Buenaventura), and Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp., known collectively as Sumitomo. The inflow of capital from Buenaventura and Sumitomo will be used as partial financing for an approximate $850 million expansion project to mine a primary sulfide ore body beneath the leachable ore body currently in production.

     In the 2005 second quarter, an additional tax charge of $2.4 million was recognized for U.S. taxes incurred with respect to dividends received from Cerro Verde in 2005.

10

Note: Supplemental Data

     The following schedules summarize the special items and provisions for the quarter and nine months ended September 30, 2004:

(Unaudited; $ in millions except per share amounts)

	2004 Third Quarter
							$/Share
Consolidated Statement of Income Line Item	Pre-tax			After-tax			After-tax
Special items and provisions, net:
PDMC —
Environmental provisions, net	$	(11.8	)		(8.9	)		(0.09	)
Environmental insurance recoveries, net		7.5			6.0			0.06
Asset impairment charges		(1.1	)		(0.9	)		(0.01	)
Historical legal matters		(2.5	)		(2.0	)		(0.02	)
		(7.9	)		(5.8	)		(0.06	)
PDI —
Environmental provisions, net		(0.2	)		(0.1	)		—
Wire and Cable restructuring programs/closures		(3.1	)		(2.3	)		(0.02	)
		(3.3	)		(2.4	)		(0.02	)
Corporate and Other —
Environmental provisions, net		(0.7	)		(0.5	)		(0.01	)
Historical legal matters		0.8			0.6			0.01
		0.1			0.1			—
		(11.1	)		(8.1	)		(0.08	)
Miscellaneous income and expense, net:
Historical legal matter		9.5			7.2			0.07
	$	(1.6	)		(0.9	)		(0.01	)

(Unaudited; $ in millions except per share amounts)

	Nine Months Ended
	September 30, 2004
							$/Share
Consolidated Statement of Income Line Item	Pre-tax			After-tax			After-tax
Special items and provisions, net:
PDMC —
Environmental provisions, net	$	(14.1	)		(10.7	)		(0.11	)
Environmental insurance recoveries, net		7.3			5.9			0.06
Asset impairment charges		(1.1	)		(0.9	)		(0.01	)
Historical legal matters		(2.5	)		(2.0	)		(0.02	)
		(10.4	)		(7.7	)		(0.08	)
PDI —
Environmental provisions, net		(0.3	)		(0.2	)		—
Wire and Cable restructuring programs/closures		(6.7	)		(4.8	)		(0.05	)
Asset impairment charges		(0.6	)		(0.5	)		(0.01	)
		(7.6	)		(5.5	)		(0.06	)
Corporate and Other —
Environmental provisions, net		(4.8	)		(3.6	)		(0.03	)
Environmental insurance recoveries, net		0.1			0.1			—
Historical legal matters		16.3			13.0			0.13
		11.6			9.5			0.10
		(6.4	)		(3.7	)		(0.04	)
Interest expense:
Texas franchise tax matter		(0.9	)		(0.7	)		(0.01	)
Early debt extinguishment costs		(37.6	)		(30.2	)		(0.31	)
Miscellaneous income and expense, net:
Cost-basis investment write-downs		(10.0	)		(9.1	)		(0.09	)
Historical legal matter		9.5			7.2			0.07
		(0.5	)		(1.9	)		(0.02	)
Provision for taxes on income:
Reversal of El Abra deferred tax asset valuation allowance		—			30.8			0.31
PD Brazil deferred tax asset valuation allowance		—			(9.0	)		(0.09	)
		—			21.8			0.22
Minority interests in consolidated subsidiaries:
Reversal of El Abra deferred tax asset valuation allowance		—			(15.1	)		(0.15	)
Candelaria early debt extinguishment costs		—			2.5			0.03
		—			(12.6	)		(0.12	)
	$	(45.4	)		(27.3	)		(0.28	)

4. New Accounting Pronouncements

     In September 2005, FASB ratified the consensus reached by the Emerging Issues Task Force (EITF) on Issue No. 04-13, “Accounting for Purchases and Sales of Inventory with the Same Counterparty.” The consensus concluded that two or more legally separate exchange transactions with the same counterparty should be combined and considered as a single arrangement for accounting purposes, if they are entered into “in contemplation” of one another. The EITF also reached a consensus that nonmonetary exchanges of inventory within the same business should be recognized at fair value. The consensus reached on EITF Issue No. 04-13 is effective

11

for new arrangements entered into, or modifications or renewals of existing arrangements, in reporting periods beginning after March 15, 2006. The Company is currently determining the impact of this Issue on its financial reporting and disclosures.

     In May 2005, FASB issued SFAS No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3.” SFAS No. 154 requires retrospective application to prior periods’ financial statements for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This Statement applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 further requires a change in depreciation, amortization or depletion method for long-lived, non-financial assets to be accounted for as a change in accounting estimate effected by a change in accounting principle. Corrections of errors in the application of accounting principles will continue to be reported by retroactively restating the affected financial statements. The provisions of this Statement are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The adoption of this Statement is not expected to have a material impact on our reporting and disclosures.

     In March 2005, FASB issued FIN 47, “Accounting for Conditional Asset Retirement Obligations— an interpretation of FASB Statement No. 143.” FIN 47 clarifies the term conditional asset retirement obligation as used in SFAS No. 143, “Accounting for Asset Retirement Obligations,” and requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value can be reasonably estimated. Any uncertainty about the amount and/or timing of future settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for fiscal years ending after December 15, 2005. The Company is currently determining the impact of FIN 47 on its financial reporting and disclosures.

     In March 2005, FASB ratified the consensus reached by the EITF on Issue No. 04-6, “Accounting for Stripping Costs Incurred during Production in the Mining Industry.” The consensus reached provides that stripping costs incurred during the production phase of a mine are variable production costs that should be included in the cost of inventory produced during the period. The consensus reached on EITF Issue No. 04-6 is effective for the first reporting period in fiscal years beginning after December 15, 2005. The Company is currently determining the impact of this Issue on its financial reporting and disclosures.

     In December 2004, FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123-R), which amends SFAS No. 123, to require companies to recognize, in their financial statements, the cost of employee services received in exchange for equity instruments issued, and liabilities incurred, to employees in share-based payment transactions, such as employee stock options and similar awards. On April 14, 2005, the Securities and Exchange Commission delayed the effective date to annual periods, rather than interim periods beginning after June 15, 2005. We have evaluated SFAS No. 123-R and determined that adoption of this Statement will not have a material impact on our financial reporting and disclosures. Upon adoption of this Statement, the modified prospective application will be utilized to account for share-based payment transactions.

     In December 2004, FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions.” SFAS No. 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29 and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The Company adopted this Statement in the 2005 third quarter. The adoption of SFAS No. 153 did not have a material impact on our financial reporting and disclosures.

     In December 2004, FASB issued FASB Staff Position (FSP) No. FAS 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004,” and FSP No. FAS 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004,” to address the accounting implications associated with the American Jobs Creation Act of 2004 (the Act), enacted in October 2004. FSP No. FAS 109-1 clarifies how to apply SFAS No. 109 to the new law’s tax deduction for income attributable to qualified domestic production activities and requires that the deduction be accounted for as a special deduction in the period earned, not as a tax-rate reduction. FSP No. FAS 109-2 provides guidance with respect to recording the potential impact of the repatriation provisions of the Act on a company’s income tax expense and deferred tax liabilities. FSP No. FAS 109-2 states that an enterprise is permitted time beyond the financial reporting period of enactment to evaluate the effect of the Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying SFAS No. 109. (Refer to Note 8, Provision for Taxes on Income, for further discussion of the impact of the Act.)

     In November 2004, FASB issued SFAS No. 151, “Inventory Costs, an Amendment of ARB No. 43, Chapter 4.” SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current period charges and requires the allocation of fixed production overhead to inventory based on the normal capacity of the production facilities. The guidance in this Statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this Statement is not expected to have a material impact on our financial reporting and disclosures.

12

5. Environmental, and Reclamation and Closure Matters

     As of September 30, 2005, and December 31, 2004, environmental reserves totaled $351.7 million and $303.6 million, respectively, for environmental liabilities attributed to Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) or analogous state programs and for estimated future costs associated with environmental matters at closed facilities and closed portions of certain operating facilities. The following table summarizes our environmental reserve activities for the quarter and nine months ended September 30, 2005:

(Unaudited; $ in millions)

	2005			Nine Months Ended
	Third Quarter			September 30, 2005
Balance, beginning of period	$	319.5			303.6
Additions to reserves		43.8			80.8
Reductions in reserve estimates		(0.6	)		(2.2	)
Spending against reserves		(11.0	)		(30.5	)
Balance, end of period	$	351.7			351.7

     The site currently considered to be most significant is the Pinal Creek site near Miami, Arizona, where $106.8 million remained in the environmental reserve at September 30, 2005. Phelps Dodge Miami, Inc. and the other members of the Pinal Creek Group (PCG) settled their contribution claims against one defendant in April 2005, which resulted in cancellation of the Phase I trial. While the terms of the settlement are confidential, the proceeds of the settlement will be used to address remediation at the Pinal Creek site. The Phase II trial, which will allocate liability, has not been scheduled.

     The site with the most significant change was the Anniston Lead Site (Anniston) located in Anniston, Alabama. PDI has been identified by the U.S. Environmental Protection Agency (EPA) as a potentially responsible party (PRP) at Anniston. Anniston consists of lead contamination in residential soils. Pursuant to an administrative order on consent/settlement agreement (Settlement Agreement), PDI, along with 10 other parties, identified by the EPA as PRPs, have agreed to conduct a non-time-critical removal action at residential properties identified to have lead contamination above certain thresholds. The Settlement Agreement was subject to public comment, which ended on October 11, 2005. The Settlement Agreement will not become final until EPA evaluates and responds to public comment. PDI and the other PRPs have entered into an interim cost-sharing agreement that assigns PDI approximately one-eighth of the costs to be incurred under the Settlement Agreement. During the 2005 third quarter, PDI concluded that it may have a liability greater than its agreed-upon interim share and therefore, has increased its reserve by $19.8 million to a total reserve of $26.7 million at September 30, 2005, which covers remedial costs, PRP group settlement costs, and legal and consulting costs.

     At September 30, 2005, the cost range for reasonably possible outcomes for all reservable remediation sites (including Pinal Creek’s estimate of approximately $103 million to $210 million) was estimated to be from approximately $312 million to $627 million (of which $351.7 million has been reserved).

     Phelps Dodge has a number of sites that are not the subject of an environmental reserve because it is not probable that a successful claim will be made against the Company for those sites, but for which there is a reasonably possible likelihood of an environmental remediation liability. As of September 30, 2005, the cost range for reasonably possible outcomes for all such sites was estimated to be from approximately $2 million to $22 million. The liabilities arising from potential environmental obligations that have not been reserved at this time may be material to the operating results of any single quarter or year in the future. Management, however, believes the liability arising from potential environmental obligations is not likely to have a material adverse effect on the Company’s liquidity or financial position as such obligations could be satisfied over a period of years.

     We recognize asset retirement obligations (AROs) as liabilities when incurred, with initial measurement at fair value. These liabilities are accreted to full value over time through charges to income. In addition, asset retirement costs (ARCs) are capitalized as part of the related asset’s carrying value and are depreciated primarily on a units-of-production basis over the asset’s useful life. Reclamation costs for future disturbances are recognized as an ARO and as a related ARC in the period incurred. The Company’s cost estimates are reflected on a third-party cost basis and comply with the Company’s legal obligation to retire long-lived assets as defined by SFAS No. 143. These cost estimates may differ from financial assurance cost estimates due to a variety of factors, including obtaining updated cost estimates for reclamation activities, the timing of reclamation activities, changes in the scope of reclamation activities and the exclusion of certain costs not accounted for under SFAS No. 143.

     The following tables summarize our asset retirement obligations and asset retirement cost activities for the quarter and nine months ended September 30, 2005:

Asset Retirement Obligations
(Unaudited; $ in millions)

				Nine Months
	2005			Ended
	Third Quarter			September 30, 2005
Balance, beginning of period	$	328.9			275.2
New liabilities during the period		1.1			2.7
Accretion expense		5.9			16.8
Payments		(11.9	)		(27.1	)
Revisions in estimated cash flows		17.7			74.5
Foreign currency translation adjustments		(0.1	)		(0.5	)
Balance, end of period	$	341.6			341.6

Asset Retirement Costs
(Unaudited; $ in millions)

				Nine Months
	2005			Ended
	Third Quarter			September 30, 2005
Gross balance, beginning of period	$	124.7			196.3
New assets during the period		1.1			2.7
Revisions in estimated cash flows		17.7			74.5
Impairment of assets		—			(129.7	)
Foreign currency translation adjustments		(0.1	)		(0.4	)
Gross balance, end of period		143.4			143.4
Less accumulated depreciation, depletion and amortization		(80.9	)		(80.9	)
Balance, end of period	$	62.5			62.5

     In the 2005 third quarter, we further revised our estimated cash flows for the Tyrone mine, resulting in an increase of $17.7 million

13

(discounted). The revision recognized a change in the scope of reclamation work for certain stockpiles and for obtaining revised cost estimates associated with the decision to accelerate reclamation activities for stockpiles and tailing.

     In the 2005 second quarter, we revised estimated cash flows for the Tyrone mine, resulting in an increase of $35.8 million (discounted). The revision recognized management’s decision to accelerate the timing of reclamation activities for stockpile work and tailing work. We also revised estimated cash flows for the Climax mine, resulting in an increase of $3.1 million (discounted), for timing and cost estimate changes resulting from Climax receiving authorization for permit modifications from the Colorado Division of Minerals and Geology.

     Additionally, in the 2005 second quarter, Tyrone and Cobre mines recorded impairments of asset retirement costs of $124.5 million and $5.2 million, respectively. (Refer to Note 3, Special Items and Provisions, for additional discussion.)

     In the 2005 first quarter, we revised our estimated cash flows for the Tyrone mine, resulting in an increase of $16.9 million (discounted). The revision recognized adjusted timing of reclamation activities for an inactive portion of the tailing operations as a result of receiving a permit modification from the Mining and Minerals Division (MMD) of the New Mexico Energy, Minerals and Natural Resources Department in March 2005, coupled with obtaining new cost estimates to perform the closure activities. We also revised our estimated cash flows for the Cobre mine, resulting in an increase of $1.0 million (discounted), for timing and cost estimate changes resulting from MMD issuing a permit revision approving the closeout plan in March 2005.

     We have estimated our share of the total cost of our AROs, including anticipated future disturbances, at approximately $1.3 billion (unescalated, undiscounted and on a third-party cost basis), leaving approximately $1 billion remaining to be accreted over time. These aggregate costs may increase or decrease materially in the future as a result of changes in regulations, technology, mine plans or other factors, and as actual reclamation spending occurs. ARO activities and expenditures generally are made over an extended period of time commencing near the end of a mine’s life; however, certain reclamation activities could be accelerated if they are determined to be beneficial.

6. Contingencies

Significant New Mexico Closure and Reclamation Programs

     Background

     The Company’s New Mexico operations, Chino, Tyrone, Cobre and Hidalgo, each are subject to regulation under the New Mexico Water Quality Act and the Water Quality Control Commission (WQCC) regulations adopted under that Act. The New Mexico Environment Department (NMED) has required each of these operations to submit closure plans for approval. The closure plans must describe the measures to be taken to prevent groundwater quality standards from being exceeded following closure of the discharging facilities and to abate any groundwater or surface water contamination.

     Chino, Tyrone and Cobre also are subject to regulation under the New Mexico Mining Act (the Mining Act), which was enacted in 1993, and the Mining Act Rules, which are administered by MMD. Under the Mining Act, Chino, Tyrone and Cobre are required to submit and obtain approval of closeout plans describing the reclamation to be performed following closure of the mines or portions of the mines.

     Financial assurance is required to ensure that funding will be available to perform both the closure and the closeout plans if the operator is not able to perform the work required by the plans. The amount of the financial assurance is based upon the estimated cost for a third party to complete the work specified in the plans, including any long-term operation and maintenance, such as operation of water treatment systems. NMED and MMD calculate the required amount of financial assurance using a “net present value” (NPV) method, based upon approved discount and escalation rates, when the closure plan and/or closeout plan require performance over a long period of time.

     In April 2005, the governor of New Mexico signed Senate Bill 986, effective June 17, 2005, that removes the requirement to provide financial assurance for the gross receipts tax levied on closure work. Eliminating this requirement is expected to reduce our New Mexico financial assurance by approximately $27 million (NPV basis).

     The Company’s cost estimates to perform the work itself (internal cost basis) generally are substantially lower than the cost estimates used for financial assurance due to the Company’s historical cost advantages, savings from the use of the Company’s own personnel and equipment as opposed to third-party contractor costs, and opportunities to prepare the site for more efficient reclamation as mining progresses.

     Chino Mines Company

     NMED issued Chino’s closure permit on February 24, 2003. The closure permit was appealed by a third party. WQCC dismissed the appeal, and that dismissal was appealed to the New Mexico Court of Appeals. On June 15, 2005, the Court of Appeals issued a decision that overturns the WQCC’s dismissal of the third-party appeal of Chino’s closure permit. The New Mexico Supreme Court has declined to review the Court of Appeals decision. Under this decision, Chino’s closure permit is expected to be remanded to the WQCC for a hearing.

     MMD issued a permit revision approving Chino’s closeout plan, subject to conditions, on December 18, 2003. MMD’s permit revision was not appealed. The third-party cost estimate is approximately $395 million (undiscounted and unescalated) over the 100-year period of the closure and closeout plans. Chino has provided financial assurance to NMED and MMD for approximately $192 million (NPV basis), including a trust fund initially containing approximately $64 million and a third-party performance guarantee for approximately $128 million provided by Phelps Dodge. At September 30, 2005, the balance of the trust fund was approximately $68 million. The guarantee is subject to a financial test that, in part, requires Phelps Dodge to maintain an investment-grade rating on its senior unsecured debt. Phelps Dodge’s senior unsecured debt currently carries an investment-grade rating.

     The terms of the NMED and MMD permits require Chino to conduct supplemental studies concerning closure and closeout,

14

including a feasibility study. The terms of the NMED permit also require Chino to prepare and submit an abatement plan. Chino is complying with those requirements. The studies and abatement plan are due to be submitted to NMED before an application for renewal of the closure permit is due in August 2007. Changes to the closure permit, which could increase or decrease the estimated cost of closure and closeout, will be considered when the permit is renewed. The permits also contain requirements and a schedule for Chino to commence closure and reclamation of inactive portions of the operations, subject to Chino’s ability to seek “standby status” for portions of the operations anticipated to resume operation in the future.

     The Company estimates its cost, on an internal cost basis, to perform the requirements of the approved Chino closure and closeout permits to be approximately $293 million (undiscounted and unescalated) over the 100-year period of the closure and closeout plans. That estimate is lower than the estimated cost used as the basis for the financial assurance amount due to the factors discussed above, and reflects our internal cost estimate. Our cost estimate, on a third-party cost basis, used to determine the fair value of our closure and closeout accrual for SFAS No. 143 was approximately $393 million (undiscounted and unescalated). This cost estimate excludes approximately $2 million of net environmental costs from the financial assurance cost estimate that are primarily not within the scope of SFAS No. 143. At September 30, 2005, and December 31, 2004, we had accrued approximately $53 million and $52 million, respectively, for closure and closeout at Chino.

     In December 1994, Chino entered into an Administrative Order on Consent (AOC) with NMED. The AOC requires Chino to perform a CERCLA quality investigation of environmental impacts and potential risks to human health and the environment associated with portions of the Chino property affected by historical mining operations. The remedial investigations began in 1995 and are still under way, although substantial portions of the remedial investigations are near completion. The Company expects that some remediation will be required and is considering interim remediation proposals, although no feasibility studies have yet been completed. NMED has not yet issued a record of decision regarding any remediation that may be required under the AOC. The Company’s estimated cost for all aspects of the AOC, as of September 30, 2005, is $21.1 million. In addition to work under the AOC, Chino is continuing ongoing projects to control blowing dust from tailing impoundments at an estimated cost of $4.8 million. Chino initiated work on excavating and removing copper-bearing material from an area known as “Lake One” for copper recovery in existing leach stockpiles at the mine. The Company’s estimated cost, as of September 30, 2005, for the remaining work at Lake One is $3.7 million. The Company’s aggregate environmental reserve for liability under the Chino AOC, the interim work on the tailing impoundments and Lake One, as described above, is $29.6 million at September 30, 2005.

     Phelps Dodge Tyrone, Inc.

     NMED issued Tyrone’s closure permit on April 8, 2003. Tyrone appealed to the WQCC, which upheld NMED’s permit conditions. Tyrone has appealed the WQCC’s decision to the New Mexico Court of Appeals.

     MMD issued a permit revision approving Tyrone’s closeout plan, subject to conditions, on April 12, 2004. MMD’s permit revision was not appealed. The third-party cost estimate is approximately $439 million (undiscounted and unescalated) over the 100-year period of the closure and closeout plans. Tyrone has provided financial assurance to NMED and MMD for approximately $271 million (NPV basis). The financial assurance includes a trust fund initially funded in the amount of approximately $17 million, to increase to approximately $27 million over five years, a letter of credit for approximately $6 million, a surety bond for approximately $58 million, and a third-party performance guarantee for approximately $190 million provided by Phelps Dodge. At September 30, 2005, the balance of the trust fund was approximately $20 million. Tyrone expects to replace the surety bond over the next several months with a reduction in financial assurance for closure work already completed, adjustments for recently passed legislation, collateral approved by MMD and NMED and an additional letter of credit. The guarantee is subject to a financial test that, in part, requires Phelps Dodge to maintain an investment-grade rating on its senior unsecured debt. Phelps Dodge’s senior unsecured debt currently carries an investment-grade rating.

     The terms of the NMED and MMD permits require Tyrone to conduct supplemental studies concerning closure and closeout plans, including a feasibility study. The terms of the NMED permit also require Tyrone to prepare and submit an abatement plan. Tyrone is complying with those requirements. The studies and abatement plan are due to be submitted to NMED before an application for renewal of the closure permit is due in October 2007. Changes to the closure permit, which could increase or decrease the estimated cost of closure and closeout, will be considered when the permit is renewed. The permits also contain requirements and a schedule for Tyrone to commence closure and reclamation of inactive portions of the operations, subject to Tyrone’s ability to seek “standby status” for portions of the operations anticipated to resume operation in the future.

     During 2004, Tyrone commenced certain closure activities with the mining of its 1C Stockpile and placement of re-mined material on existing leach stockpiles for recovery of residual copper. Through September 30, 2005, approximately $19 million has been spent on the 1C Stockpile removal action. Once removal activities are completed in 2005, the remaining material will be graded and capped to meet stipulated closure requirements. As a result of management’s decision, Tyrone is also accelerating reclamation of tailing and stockpile facilities. Tyrone also initiated planning for accelerated reclamation of tailing impoundments located within the Mangas Valley, with initial earthwork commencing in November 2004. The project is expected to be completed in 2008. Additionally, as of September 30, 2005, Tyrone substantially completed reclamation of the Burro Mountain tailing area at an approximate cost of $1 million. Tyrone has applied for reductions in the required amount of financial assurance for some of the closure and reclamation work that has been performed.

     The Company estimates its costs, on an internal cost basis, to perform the requirements of Tyrone’s closure and closeout permits to

15

be approximately $355 million (undiscounted and unescalated) over the 100-year period of the closure and closeout plans. That estimate does not yet reflect reductions for work performed in 2004 through September 30, 2005, and is lower than the estimated cost used as the basis for the financial assurance amount due to the factors discussed above. Our cost estimate, on a third-party cost basis, used to determine the fair value of our closure and closeout accrual for SFAS No. 143 was approximately $459 million (undiscounted and unescalated). This cost estimate includes approximately $20 million of net costs in addition to the financial assurance cost estimate that primarily relate to an increased scope of work for the tailing, stockpiles and other projects, and updated estimates for actual closure expenditures. At September 30, 2005, and December 31, 2004, we had accrued approximately $166 million and $99 million, respectively, for closure and closeout at Tyrone.

     Cobre Mining Company

     NMED issued Cobre’s closure permit on December 10, 2004. On March 3, 2005, MMD issued a permit revision approving Cobre’s closeout plan, subject to conditions. The third-party cost estimate is approximately $45 million (undiscounted and unescalated) over the 100-year period of the closure and closeout plans. Cobre has provided financial assurance to NMED and MMD for approximately $29 million (NPV basis). The financial assurance includes a trust initially funded in the amount of at least $1 million, to increase to $3 million over five years, real estate collateral for approximately $8 million, and a third-party performance guarantee for approximately $20 million provided by Phelps Dodge. At September 30, 2005, the balance of the trust fund was approximately $2 million.

     The terms of the NMED and MMD permits require Cobre to conduct supplemental studies concerning closure and closeout, including a feasibility study. Cobre is complying with those requirements. The terms of the NMED permit also require Cobre to prepare and submit an abatement plan. The studies and abatement plan are due to be submitted to NMED before an application to renew the closure permit is due in 2009. Changes to the closure permit, which could increase or decrease the estimated cost of closure and closeout, will be considered when the permit is renewed. The permits also contain requirements and a schedule for Cobre to commence closure and reclamation of inactive portions of the operations, subject to Cobre’s ability to seek “standby status” for portions of the operations anticipated to resume operation in the future.

     The Company estimates its costs, on an internal cost basis, to perform the requirements of Cobre’s closure and closeout permits to be approximately $39 million (undiscounted and unescalated) over the 100-year period of the closure and closeout plans. That estimate is lower than the estimated cost used as the basis for the financial assurance amount due to the factors discussed above. Our cost estimate, on a third-party cost basis, used to determine the fair value of our closure and closeout accrual for SFAS No. 143 was approximately $46 million (undiscounted and unescalated). This cost estimate includes approximately $1 million of costs in addition to the financial assurance cost estimate that primarily relates to construction of test plots for stockpile studies. At September 30, 2005, and December 31, 2004, we had accrued approximately $8 million and $7 million, respectively, for closure and closeout at Cobre.

     Phelps Dodge Hidalgo, Inc.

     Hidalgo obtained approval of a closure plan under a discharge permit issued by NMED in 2000. In accordance with the permit, Hidalgo provided financial assurance to NMED in the form of surety bonds for approximately $11 million. Since obtaining approval of the closure plan, Hidalgo has completed the closure of a former wastewater evaporation pond by construction of a soil cap approved by NMED. The discharge permit under which the closure plan was approved also requires corrective action for contaminated groundwater near the smelter’s closed former wastewater evaporation pond. Impacted groundwater is pumped from a series of wells, treated in a neutralization facility, and discharged to a series of lined impoundments or to an irrigation system. The discharge permit requires comprehensive studies to characterize soil and groundwater at this site. NMED could require soil remediation and future enhancement of the existing groundwater containment system based upon the results of the ongoing studies. A discharge permit renewal application was submitted in February 2005. As part of this permit process, Hidalgo and NMED will update the closure plan and address remedial requirements, if warranted. Hidalgo is not subject to the Mining Act and, consequently, does not require a closeout plan. Our cost estimate used to determine the fair value of our reclamation obligation was approximately $7 million (undiscounted and unescalated). At both September 30, 2005, and December 31, 2004, we had accrued approximately $4 million for closure at Hidalgo.

Significant Changes in International Closure and Reclamation Programs

     Sociedad Minera Cerro Verde S.A.A.

     On August 15, 2005, the Peruvian Ministry of Energy and Mines published the final regulation associated with the Mine Closure Law. The regulation requires companies to submit closure plans for existing projects within one year after August 15, 2005, and for new projects within one year after approval of the Environment Impact Statement. Additionally, the regulation sets forth the financial assurance requirements, including guidance for calculating the estimated cost and the types of financial assurance instruments that can be utilized.

     In accordance with the new regulation, the Company is required to submit the closure plan for the Cerro Verde mine before August 15, 2006. We are currently in the process of reviewing the technical requirements and obtaining updated ARO estimates to comply with the regulation. We are also in the process of determining our financial assurance obligations associated with the new regulation. At September 30, 2005, and December 31, 2004, our ARO estimates for Cerro Verde were based on the requirements set forth in our environmental permits. The potential impact of this new regulation on Phelps Dodge cannot reasonably be estimated at this time.

     Other

     On February 7, 2004, the Chilean Ministry of Mining published and passed a modification to its mining safety regulations. The current published regulation requires a company to submit a reclamation plan within five years of the published regulation. This modification may impact our ARO estimates and financial assurance obligations. At September 30, 2005, and December 31, 2004, our ARO estimates for our Chilean mines were based on the requirements set forth in

16

our environmental permits. We are currently in the process of determining the requirements and obtaining updated ARO estimates to comply with this modification to the mining safety regulations. Any potential impact of this modification on Phelps Dodge cannot reasonably be estimated at this time.

7. Earnings Per Share

     Basic earnings per share are computed by dividing net income available to common shares by the weighted average number of common shares outstanding for the period. Diluted earnings per share are computed similarly to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares had been issued, and the numerator is based on total net income. Unvested restricted stock is included only in the computation of diluted earnings per share as the shares are contingent only upon vesting.

     Common shares relating to stock options where the exercise price exceeded the average market price of the Company’s common shares during the 2004 periods were also excluded from the diluted earnings per share calculation as the related impact was anti-dilutive.

(Unaudited; $ in millions except per share data)

	Third Quarter
	2005		2004
Basic Earnings Per Share Computation
Numerator:
Net income	$	366.1		292.9
Preferred stock dividends		—		(3.3	)
Net income applicable to common shares	$	366.1		289.6
Denominator:
Weighted average common shares outstanding		98.6		93.8
Basic earnings per common share	$	3.71		3.09
Diluted Earnings Per Share Computation
Numerator:
Net income	$	366.1		292.9
Denominator:
Weighted average common shares outstanding		98.6		93.8
Weighted average employee stock options		0.3		1.1
Weighted average restricted stock issued to employees		0.4		0.3
Weighted average mandatory convertible preferred shares		2.1		4.2
Total weighted average common shares outstanding		101.4		99.4
Diluted earnings per common share	$	3.61		2.95

(Unaudited; $ in millions except per share data)

	Nine Months Ended
	September 30,
	2005			2004
Basic Earnings Per Share Computation
Numerator:
Net income	$	1,435.1			705.2
Preferred stock dividends		(6.8	)		(10.1	)
Net income applicable to common shares	$	1,428.3			695.1
Denominator:
Weighted average common shares outstanding		96.8			92.8
Basic earnings per common share	$	14.75			7.49
Diluted Earnings Per Share Computation
Numerator:
Net income	$	1,435.1			705.2
Denominator:
Weighted average common shares outstanding		96.8			92.8
Weighted average employee stock options		0.4			1.2
Weighted average restricted stock issued to employees		0.4			0.4
Weighted average mandatory convertible preferred shares		3.5			4.2
Weighted average common shares outstanding		101.1			98.6
Diluted earnings per common share	$	14.19			7.15

8. Provision for Taxes on Income

     The Company’s income tax provision for the 2005 third quarter resulted from taxes on earnings at U.S. operations ($57.1 million) including recognition of valuation allowances ($34.1 million), and taxes on earnings at international operations ($51.5 million) including benefits from the release of valuation allowances ($0.9 million).

     The Company’s income tax provision for the nine months ended September 30, 2005, resulted from taxes on earnings at U.S. operations ($179.2 million) including recognition of valuation allowances ($2.2 million), and taxes on earnings at international operations ($135.2 million) including recognition of valuation allowances ($0.6 million).

     The net recognition in our domestic valuation allowances for the quarter and nine months ended September 30, 2005, was attributable to a portion of our U.S. federal minimum tax credits, as well as our state net operating loss (NOL) carryforwards.

     The Company’s income tax provision for the 2004 third quarter resulted from taxes on earnings at international operations ($36.1 million) including benefits from the release of valuation allowances ($14.8 million) and taxes on earnings at U.S. operations ($26.1 million) including benefits from the release of valuation allowances ($25.7 million).

     The Company’s income tax provision for the nine months ended September 30, 2004, resulted from (i) taxes on earnings at international operations ($91.9 million) including benefits from the release of valuation allowances ($60.6 million), (ii) taxes on earnings at U.S. operations ($39.0 million) including benefits from the release of

17

valuation allowances ($91.9 million) and (iii) the recognition of a valuation allowance for deferred tax assets at our Brazilian wire and cable operation ($9.0 million); partially offset by the reversal of the valuation allowance associated with deferred tax assets that were expected to be realized after 2004 at our 51 percent-owned El Abra copper mine ($30.8 million).

     The release of both the domestic and international valuation allowances for the quarter and nine months ended September 30, 2004, reflects NOLs and other tax credits that were expected to be utilized.

     The Company’s effective income tax rate for the nine months ended September 30, 2005, was 16.9 percent, compared with 11.3 percent for the corresponding 2004 period. The difference between our effective income tax rate for the nine months ended September 30, 2005, and the U.S. federal statutory tax rate (35 percent) primarily was due to (i) percentage depletion deductions for regular tax purposes in the United States, (ii) a portion of the gain on the sale of our investment in SPCC being offset by previously unrecognized capital loss carryovers, (iii) the extraterritorial income exclusion associated with foreign molybdenum sales, (iv) Peruvian reinvestment benefits resulting from the Cerro Verde mine expansion and (v) deferred income taxes not being provided on the change in interest gain from the Cerro Verde stock issuance (refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for further discussion of the tax benefit), as we expect to permanently reinvest our portion of the proceeds in that entity. The difference between the effective income tax rate for the nine months ended September 30, 2004, and the U.S. federal statutory tax rate primarily was due to percentage depletion deductions for regular tax purposes in the United States and the release of valuation allowances related to certain of our deferred tax assets.

     The recent enactment of the American Jobs Creation Act of 2004 (the Act) has caused us to re-evaluate our current policy with respect to the repatriation of foreign earnings. The Act provides an effective U.S. federal tax rate of 5.25 percent on certain foreign earnings repatriated during a one-year period (2005 for Phelps Dodge), but also results in the loss of any foreign tax credits associated with these earnings. The maximum amount of the Company’s foreign earnings that qualify for this one-time deduction is approximately $638 million. At the present time, other than the amount provided for dividends received in 2005 from Cerro Verde, we have not decided whether and to what extent we might repatriate foreign earnings or the related income tax effect of such repatriation. Our analysis indicates that the additional utilization of the provision discussed above would have minimal impact on the Company’s taxes. We expect to finalize our assessment by the end of the 2005 fourth quarter, at which time any tax impact would be recognized.

9. Accounting for Derivative Instruments and Hedging Activities

     The Company does not purchase, hold or sell derivative financial contracts unless we have an existing asset or obligation or we anticipate a future activity that is likely to occur and will result in exposing us to market risk. We do not enter into any contracts for speculative purposes. We use various strategies to manage our market risk, including the use of derivative contracts to limit, offset or reduce our market exposure. Derivative instruments are used to manage well-defined commodity price, energy, foreign exchange and interest rate risks from our primary business activities. The fair values of our derivative instruments are based on valuations provided by third parties or widely published market closing prices at period end. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operation and Note 21, Derivative Financial Instruments and Fair Value of Financial Instruments, to the Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2004, for a discussion of our derivative instruments.

     Phelps Dodge has entered into programs to protect a portion of its expected global copper production by purchasing zero-premium copper collars and copper put options. The copper collars and the copper put options are settled on an average London Metal Exchange (LME) pricing basis for their respective hedge periods. The copper collar put options are settled monthly for 2005 and 2006, and annually for 2007; the copper collar call options are settled annually. The copper put options are settled monthly for 2006, and annually for 2007. Phelps Dodge entered into the programs as insurance to help ameliorate the effects of unanticipated copper price decreases.

     The following table provides a summary of PDMC’s zero-premium copper collar and copper put option programs for 2005, 2006 and 2007:

(Unaudited)

	2005			2006		2007
Copper Collars:
Pounds of zero-premium copper collars purchased (in millions)		198	(A)		564		486
Average LME put strike price (floor) per pound	$	0.943			0.954		0.950
Annual average LME call strike price (ceiling) per pound	$	1.400			1.632		2.002
Unrealized pre-tax losses for the 2005 third quarter (in millions)(B)	$	22			2		—
Unrealized pre-tax losses for the nine months ended September 30, 2005 (in millions)(B)	$	43			2		—
Copper Put Options:
Pounds of copper put options purchased (in millions)		—			564		730
Average LME put strike price per pound	$	—			0.950		0.950
Premium cost per pound	$	—			0.020		0.023

(A)	2005 excludes El Abra; refer to the table on page 18 for a summary of El Abra’s 2005 zero-premium copper collar program.
(B)	The 2005 unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617 per pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.40 per pound. The 2006 unrealized pre-tax losses resulted from the 2006 LME forward average price of $1.555 per pound exceeding a portion of our 2006 zero-premium copper collars (weighted average of $1.632 per pound).

18

     The following table provides a summary of El Abra’s 2005 zero-premium copper collar program for 2005:

(Unaudited)

	2005
El Abra Copper Collars:
Pounds of zero-premium copper collars purchased (in millions)		452
Monthly average LME put strike price (floor) per pound	$	1.000
Annual average LME call strike price (ceiling) per pound	$	1.376
Unrealized pre-tax losses for the 2005 third quarter (in millions)(A)	$	51
Unrealized pre-tax losses for the nine months ended September 30, 2005 (in millions)(A)	$	108

(A) The unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617 per pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.376 per pound (approximately $26 million and $55 million for PD’s share for the quarter and nine months ended September 30, 2005, respectively).

     Transactions under these copper price protection programs do not qualify for hedge accounting treatment under SFAS No. 133 and are adjusted to fair market value each reporting period with the gain or loss recorded in earnings. The actual impact of our 2005, 2006 and 2007 zero-premium copper collar programs will not be fully determinable until the maturity of the collars at each respective year-end.

     During the quarter and nine months ended September 30, 2005, we reclassified approximately $5.0 million and $6.6 million, respectively, from other comprehensive income to the Consolidated Statement of Income, primarily as a result of our domestic energy (diesel fuel and natural gas) price protection contracts.

     During the quarter and nine months ended September 30, 2004, we reclassified approximately $4.3 million from other comprehensive income and $7.9 million from other comprehensive losses, respectively, to the Consolidated Statement of Income. The quarter-end gains were primarily the result of our domestic diesel fuel hedges, while the year-to-date losses principally resulted from the unwinding of our floating-to-fixed interest rate swaps.

10. Pension and Postretirement Benefits

     The following tables present the components of net periodic benefit cost for pension benefits and postretirement benefits for the quarters and nine months ended September 30, 2005 and 2004:

Pension Benefits
(Unaudited; $ in millions)

	Third Quarter
	2005			2004
Service cost	$	7.1			5.9
Interest cost		18.6			18.0
Expected return on plan assets		(21.6	)		(21.0	)
Amortization of prior service cost		0.9			0.9
Amortization of actuarial loss		3.5			0.8
Curtailment and special retirement benefits		0.1			—
Net periodic benefit cost	$	8.6			4.6

	Nine Months Ended
	September 30,
	2005			2004
Service cost	$	21.1			17.7
Interest cost		55.9			54.0
Expected return on plan assets		(64.7	)		(63.1	)
Amortization of prior service cost		2.5			2.7
Amortization of actuarial loss		10.6			2.4
Curtailment and special retirement benefits		0.1			0.6
Net periodic benefit cost	$	25.5			14.3

Postretirement Benefits
(Unaudited; $ in millions)

	Third Quarter
	2005		2004
Service cost	$	1.1		1.3
Interest cost		5.1		5.9
Expected return on plan assets		—		(0.1	)
Amortization of prior service cost		0.1		0.3
Amortization of actuarial loss		0.3		0.1
Net periodic benefit cost	$	6.6		7.5

	Nine Months Ended
	September 30,
	2005			2004
Service cost	$	3.3			4.0
Interest cost		14.7			17.5
Expected return on plan assets		(0.1	)		(0.2	)
Amortization of prior service cost		0.2			0.9
Amortization of actuarial loss		0.3			0.3
Other		—			(1.1	)
Net periodic benefit cost	$	18.4			21.4

     Our pension expense in the 2005 third quarter was $8.6 million, compared with $4.6 million in the 2004 third quarter. The increase of $4.0 million was primarily due to an increase in service costs ($1.2 million) resulting from the effect of a 50-basis point reduction in the discount rate and amortization of actuarial loss ($2.7 million).

     Our pension expense for the first nine months of 2005 was $25.5 million, compared with $14.3 million in the corresponding 2004 period. The increase of $11.2 million was primarily due to an increase in service costs ($3.4 million) resulting from the effect of a

19

50-basis point reduction in the discount rate, interest costs ($1.9 million) resulting from the effect of a 50-basis point reduction in the discount rate and actuarial losses, and amortization of actuarial loss ($8.2 million); partially offset by an increase in expected return on plan assets ($1.6 million).

     On July 13, 2005, we made a cash contribution of $250 million to the master trust that funds our U.S. qualified defined benefit pension plans. This action has funded virtually the entire projected benefit obligation for those plans as reported at December 31, 2004.

     Our postretirement expense in the 2005 third quarter was $6.6 million, compared with $7.5 million in the 2004 third quarter. The decrease of $0.9 million was primarily due to a decrease in interest costs ($0.8 million) resulting from a decrease in benefit liability due to a plan amendment associated with employee life insurance and the federal subsidy associated with The Medicare Prescription Drug, Improvement and Modernization Act of 2003.

     Our postretirement expense for the first nine months of 2005 was $18.4 million, compared with $21.4 million in the corresponding 2004 period. The decrease of $3.0 million was primarily due to a decrease in interest costs ($2.8 million) resulting from a decrease in benefit liability due to a plan amendment associated with employee life insurance and the federal subsidy associated with The Medicare Prescription Drug, Improvement and Modernization Act of 2003.

11. Debt and Other Financing

     In July 2005, the Company completed a tender offer for its 8.75 percent Notes due in 2011, which resulted in the retirement of long-term debt with a book value of approximately $280 million (representing approximately 72 percent of the outstanding notes). This resulted in a 2005 third quarter, special, pre-tax charge of $54.0 million, including purchase premiums, for early debt extinguishment costs.

     In July 2005, El Abra fully repaid subordinated debt of $34.3 million to Corporación Nacional del Cobre de Chile, its minority interest partner. At September 30, 2005, El Abra was debt-free.

     The Company filed a $1 billion shelf registration statement on Form S-3 with the Securities and Exchange Commission, which was declared effective May 10, 2005, to combine the $400 million shelf registration filed April 15, 2005, and $600 million outstanding under a shelf registration statement that was declared effective on July 15, 2003. The shelf registration provides flexibility to efficiently access capital markets should financial circumstances warrant.

     On April 1, 2005, the Company amended the agreement for its $1.1 billion revolving credit facility, extending its maturity to April 20, 2010, and slightly modifying its fee structure. The facility is to be used for general corporate purposes. The agreement permits borrowings of up to $1.1 billion, with a $300 million sub-limit for letters of credit. Under the agreement, interest is payable at a variable rate based on the agent bank’s prime rate or at a fixed rate based on LIBOR or fixed rates offered independently by the several lenders, for maturities of up to 360 days. The agreement requires the Company to maintain a minimum EBITDA (as defined in the agreement) to interest ratio of 2.25 on a rolling four-quarter basis, and limits consolidated indebtedness to 55 percent of total consolidated capitalization (as defined in the agreement).

     At September 30, 2005, there was approximately $75 million of letters of credit issued under the new revolver. Total availability under the revolving credit facility at September 30, 2005, amounted to approximately $1,025 million, of which approximately $225 million could be used for additional letters of credit.

     On September 30, 2005, the Company entered into a number of agreements in connection with obtaining debt-financing facilities in the overall amount of $450 million for the expansion of the Cerro Verde copper mine. Export credit agencies and commercial banks supporting the debt-financing facility are the Japan Bank for International Cooperation (JBIC), KfW banking group of Germany (KfW), Calyon New York Branch, Mizuho Corporate Bank of Japan, Scotia Capital of Canada and the Royal Bank of Scotland. The JBIC facility also includes Sumitomo Mitsui Banking Corp. and Bank of Tokyo Mitsubishi. Phelps Dodge has guaranteed its adjusted pro rata share of the financing until completion of construction and has agreed to maintain a net worth of at least $1.5 billion. The security package associated with the debt-financing facilities includes mortgages and pledges of substantially all of the assets of Cerro Verde and requires the Company, Sumitomo and Buenaventura to pledge their respective shares of Cerro Verde.

     The financing comprises (i) a JBIC facility with two tranches totaling $247.5 million (Tranche A of $173.25 million and Tranche B of $74.25 million), (ii) a KfW facility totaling $22.5 million, and (iii) a commercial bank loan facility of $180.0 million, of which $90.0 million represents a stand-by facility intended to be replaced by the issuance of Peruvian bonds at a later date. The financing has a maximum 10-year term, and repayment consists of 16 semi-annual installments commencing on the earlier of the March 20 or the September 20 next occurring after commencement of commercial operations or March 20, 2008. Under the JBIC and commercial bank loan facilities, interest is payable at a floating rate based on LIBOR, plus a fixed margin. Under the KfW facility, interest is payable at a variable or fixed rate, determined by Cerro Verde based on market rates at the time of drawdown. At September 30, 2005, there were no borrowings under the facilities.

12. Shareholders’ Equity

Series A Mandatory Convertible Preferred Stock

     On August 15, 2005, our Series A Mandatory Convertible Preferred Stock (Series A Stock) automatically converted, at the rate of 2.083, into 4.2 million shares of Common Stock. The conversion rate was based on the average closing market price for the 20 consecutive trading days ending with the third trading day immediately preceding the conversion date. Each share of Series A Stock was non-voting and entitled to an annual dividend of $6.75, paid quarterly. At September 30, 2005, there were no preferred shares outstanding.

Stock Options Exercised

     During the 2005 third quarter, 0.4 million stock options were exercised for Phelps Dodge common shares, for which Phelps Dodge received approximately $20.6 million.

     During the nine months ended September 30, 2005, 1.2 million stock options were exercised for Phelps Dodge common shares, for which Phelps Dodge received approximately $56.0 million.

20

REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     The financial information as of September 30, 2005, and for the three-month and nine-month periods ended September 30, 2005 and 2004, included in Part I pursuant to Rule 10-01 of Regulation S-X has been reviewed by PricewaterhouseCoopers LLP (PricewaterhouseCoopers), the Company’s independent registered public accounting firm, in accordance with the standards of the Public Company Accounting Oversight Board (United States). PricewaterhouseCoopers’ report is included below.

     PricewaterhouseCoopers does not carry out any significant or additional procedures beyond those that would have been necessary if its report had not been included in this quarterly report. Accordingly, such report is not a “report” or “part of a registration statement” within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11 of such Act do not apply.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Phelps Dodge Corporation:

     We have reviewed the accompanying consolidated balance sheet of Phelps Dodge Corporation and its subsidiaries as of September 30, 2005, and the related consolidated statement of income for each of the three-month and nine-month periods ended September 30, 2005 and 2004, the consolidated statement of cash flows for the nine-month periods ended September 30, 2005 and 2004, and the consolidated statement of shareholders’ equity for the nine-month period ended September 30, 2005. This interim financial information is the responsibility of the Company’s management.

     We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

     Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

     We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2004, and the related consolidated statement of income, of cash flows, and of shareholders’ equity for the year then ended, management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004 and the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004; and in our report dated March 7, 2005, we expressed unqualified opinions thereon. The consolidated financial statements and management’s assessment of the effectiveness of internal control over financial reporting referred to above are not presented herein. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2004, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
October 25, 2005

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The U.S. securities laws provide a “safe harbor” for certain forward-looking statements. This quarterly report contains forward-looking statements that express expectations of future events or results. All statements based on future expectations rather than historical facts are forward-looking statements that involve a number of risks and uncertainties, and Phelps Dodge Corporation (the Company, which may be referred to as Phelps Dodge, PD, we, us or ours) cannot give assurance that such statements will prove to be correct. Refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s report on Form 10-K for the year ended December 31, 2004, for a further discussion of such risks and uncertainties, our operations, and our critical accounting policies. Refer to Note 1, General Information, to our unaudited September 30, 2005, Consolidated Financial Information, for a discussion of our consolidation policy.

RESULTS OF OPERATIONS

Consolidated Financial Results

(Unaudited; $ in millions)

	Third Quarter
	2005			2004
Sales and other operating revenues	$	2,359.8			1,846.5
Operating income	$	567.9			405.2
Minority interests in consolidated subsidiaries	$	(51.9	)		(43.4	)
Net income	$	366.1			292.9
Basic earnings per common share	$	3.71			3.09
Diluted earnings per common share	$	3.61			2.95

     The Company had consolidated net income for the 2005 third quarter of $366.1 million, or $3.61 per common share, including special, net charges of $75.8 million, or 75 cents per common share, after taxes. (All references to per share earnings are based on diluted earnings per share.) In the 2004 third quarter, consolidated net income was $292.9 million, or $2.95 per common share, including special, net charges of $0.9 million, or 1 cent per common share, after taxes.

     Consolidated net income increased $73.2 million in the 2005 third quarter compared with the 2004 third quarter. The increase primarily included the effects of higher copper prices (approximately $178 million), including premiums and copper pricing adjustments, and higher molybdenum earnings, including earnings from primary molybdenum mines (approximately $55 million) and by-product molybdenum contribution (approximately $130 million). These were offset by (i) higher copper production costs (approximately $124 million), which exclude by-product molybdenum revenues, (ii) higher early debt extinguishment costs ($54.0 million), (iii) a higher tax provision ($46.4 million) due to higher earnings, (iv) higher special, net charges for environmental provisions recognized for closed facilities and closed portions of operating facilities ($30.5 million), (v) lower copper sales volumes (approximately $29 million) and (vi) higher exploration and research expense ($11.3 million).

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005			2004
Sales and other operating revenues	$	6,577.9			5,094.4
Operating income	$	1,290.6			1,074.7
Minority interests in consolidated subsidiaries	$	(117.4	)		(149.0	)
Net income	$	1,435.1			705.2
Basic earnings per common share	$	14.75			7.49
Diluted earnings per common share	$	14.19			7.15

     The Company had consolidated net income for the nine months ended September 30, 2005, of $1,435.1 million, or $14.19 per common share, including special, net gains of $150.1 million, or $1.48 per common share, after taxes. For the nine months ended September 30, 2004, consolidated net income was $705.2 million, or $7.15 per common share, including special, net charges of $27.3 million, or 28 cents per common share, after taxes.

     Consolidated net income increased $729.9 million for the nine months ended September 30, 2005, compared with the corresponding 2004 period. The increase primarily included the effects of (i) higher copper prices (approximately $450 million), including premiums and copper pricing adjustments, (ii) the gain recognized on the sale of a cost-basis investment ($438.4 million), (iii) the change in interest gain associated with the Cerro Verde stock issuance ($159.5 million), (iv) higher molybdenum earnings, including earnings from primary molybdenum mines (approximately $195 million) and by-product molybdenum contribution (approximately $453 million), (v) lower net interest expense ($43.7 million), (vi) lower minority interests in consolidated subsidiaries ($31.6 million) and (vii) higher interest income ($35.6 million). These were offset by (i) asset impairment charges recorded at PDMC in the 2005 second quarter ($419.1 million), (ii) higher copper production costs (approximately $365 million), which exclude by-product molybdenum revenues, (iii) higher tax provision ($205.3 million) due to higher earnings, (iv) higher special, net charges for environmental provisions recognized for closed facilities and closed portions of operating facilities ($59.4 million) and (v) higher exploration and research expense ($27.7 million).

Special Items and Provisions

     Throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations there is disclosure and discussion of what management believes to be special items and provisions. We view special items as unpredictable and atypical of our operations in the period. We believe consistent identification, disclosure and discussion of such items, both favorable and unfavorable, provide additional information to assess the quality of our performance and our earnings or losses. In addition, management measures the performance of its reportable segments excluding special items. This supplemental information is not a substitute for any U.S. generally accepted accounting principles (GAAP) measure and should be evaluated within the context of our U.S. GAAP results. The tax impacts of the special items were

22

determined at the marginal effective tax rate of the appropriate taxing jurisdiction, including provision for valuation allowance, if warranted. Any supplemental information references to earnings, losses or results excluding special items or before special items is a non-GAAP measure that may not be comparable to similarly titled measures reported by other companies.

Note: Supplemental Data

     The following table summarizes consolidated net income, special items and provisions, and the resultant earnings excluding these special items and provisions for the quarter and nine-month periods ended September 30, 2005 and 2004:

(Unaudited; $ in millions)

	Third Quarter
	2005			2004
Net income	$	366.1			292.9
Special items and provisions, net of taxes		(75.8	)		(0.9	)
Earnings excluding special items and provisions (after taxes)	$	441.9			293.8

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005		2004
Net income	$	1,435.1		705.2
Special items and provisions, net of taxes		150.1		(27.3	)
Earnings excluding special items and provisions (after taxes)	$	1,285.0		732.5

23

Note: Supplemental Data

     The following schedules summarize the special items and provisions for the quarter and nine-month periods ended September 30, 2005 and 2004 (refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion):

(Unaudited; $ in millions except per share data)

	2005 Third Quarter									2004 Third Quarter
							$/Share									$/Share
Consolidated Statement of Income Line Item	Pre-tax			After-tax			After-tax			Pre-tax			After-tax			After-tax
Special items and provisions, net:
PDMC (see Business Segment disclosure)	$	(8.5	)		(6.5	)		(0.07	)		(7.9	)		(5.8	)		(0.06	)
PDI (see Business Segment disclosure)		(1.8	)		(1.4	)		(0.01	)		(3.3	)		(2.4	)		(0.02	)
Corporate and Other —
Environmental provisions, net		(34.4	)		(26.3	)		(0.26	)		(0.7	)		(0.5	)		(0.01	)
Environmental insurance recoveries, net		0.1			—			—			—			—			—
Historical legal matters		(0.4	)		(0.3	)		—			0.8			0.6			0.01
		(34.7	)		(26.6	)		(0.26	)		0.1			0.1			—
		(45.0	)		(34.5	)		(0.34	)		(11.1	)		(8.1	)		(0.08	)
Early debt extinguishment costs		(54.0	)		(41.3	)		(0.41	)		—			—			—
Miscellaneous income and expense, net:
Historical legal matter		—			—			—			9.5			7.2			0.07
	$	(99.0	)		(75.8	)		(0.75	)		(1.6	)		(0.9	)		(0.01	)

24

(Unaudited; $ in millions except per share data)

	Nine Months Ended									Nine Months Ended
	September 30, 2005									September 30, 2004
							$/Share									$/Share
Consolidated Statement of Income Line Item	Pre-tax			After-tax			After-tax			Pre-tax			After-tax			After-tax
Special items and provisions, net:
PDMC (see Business Segment disclosure)	$	(429.4	)		(328.8	)		(3.25	)		(10.4	)		(7.7	)		(0.08	)
PDI (see Business Segment disclosure)		(3.3	)		(2.0	)		(0.02	)		(7.6	)		(5.5	)		(0.06	)
Corporate and Other —
Environmental provisions, net		(54.1	)		(41.3	)		(0.41	)		(4.8	)		(3.6	)		(0.03	)
Environmental insurance recoveries, net		1.2			0.9			0.01			0.1			0.1			—
Historical legal matters		4.3			4.1			0.04			16.3			13.0			0.13
		(48.6	)		(36.3	)		(0.36	)		11.6			9.5			0.10
		(481.3	)		(367.1	)		(3.63	)		(6.4	)		(3.7	)		(0.04	)
Interest expense:
Texas franchise tax matter		—			—			—			(0.9	)		(0.7	)		(0.01	)
Early debt extinguishment costs		(54.0	)		(41.3	)		(0.41	)		(37.6	)		(30.2	)		(0.31	)
Gain on sale of cost-basis investment		438.4			388.0			3.84			—			—			—
Change in interest gain from Cerro Verde stock issuance		159.5			172.9			1.71			—			—			—
Miscellaneous income and expense, net:
Cost-basis investment write-downs		—			—			—			(10.0	)		(9.1	)		(0.09	)
Historical legal matter		—			—			—			9.5			7.2			0.07
		—			—			—			(0.5	)		(1.9	)		(0.02	)
Provision for taxes on income:
Foreign dividend tax		—			(2.4	)		(0.03	)		—			—			—
Reversal of El Abra deferred tax asset valuation allowance		—			—			—			—			30.8			0.31
PD Brazil deferred tax asset valuation allowance		—			—			—			—			(9.0	)		(0.09	)
		—			(2.4	)		(0.03	)		—			21.8			0.22
Minority interests in consolidated subsidiaries:
Reversal of El Abra deferred tax asset valuation allowance		—			—			—			—			(15.1	)		(0.15	)
Candelaria early debt extinguishment costs		—			—			—			—			2.5			0.03
		—			—			—			—			(12.6	)		(0.12	)
	$	62.6			150.1			1.48			(45.4	)		(27.3	)		(0.28	)

Business Divisions

     Results for 2005 and 2004 can be meaningfully compared by separate reference to our reporting divisions, Phelps Dodge Mining Company (PDMC) and Phelps Dodge Industries (PDI). PDMC is a business division that includes our worldwide copper operations from mining through rod production, marketing and sales; molybdenum operations from mining through manufacturing, marketing and sales; other mining operations and investments; and worldwide mineral exploration, technology and development programs. PDI, our manufacturing division, produces engineered products principally for the global energy, transportation and specialty chemicals sectors. PDI includes our Specialty Chemicals segment and our Wire and Cable segment. Significant events and transactions have occurred within each segment that, as indicated in the separate discussions presented below, are material to an understanding of the particular year’s results and to a comparison with results of the other periods.

     The Company is continuing to explore strategic alternatives for PDI that may include potential subsidiary sales, selective asset sales, restructurings, joint ventures and mergers, or, alternatively, retention and selective growth. No decision has yet been made to proceed with any such transaction and no assurance can be given that a transaction will be concluded. Whether any such transaction would result in the recognition of a gain or loss depends on the final purchase price and other terms and cannot yet be determined. On September 6, 2005, the Phelps Dodge board of directors approved plans for Specialty Chemicals to build a new carbon black manufacturing facility in Bahia, Brazil, at a greenfield location in the Camacari petrochemical complex in the northeastern area of Brazil.

RESULTS OF PHELPS DODGE MINING COMPANY

     PDMC includes 12 reportable segments and other mining activities. In the 2004 fourth quarter, the Company reassessed its reportable segments. The reassessment considered the significant increase in copper and molybdenum prices. Based upon our assessment, we are separately disclosing Bagdad, Sierrita, Manufacturing and Sales as individual reportable segments, whereas in 2004 Bagdad and Sierrita, and Manufacturing and Sales were aggregated. In accordance with Statement of Financial Accounting Standards (SFAS) No. 131, “Disclosures about Segments of an Enterprise and Related Information,” segment information for 2004 has been revised to conform with the 2005 presentation.

25

     PDMC has six reportable copper production segments in the United States (Morenci, Bagdad, Sierrita, Miami/Bisbee, Chino/Cobre and Tyrone) and three reportable copper production segments in South America (Candelaria/Ojos del Salado, Cerro Verde and El Abra). These segments include open-pit mining, underground mining, sulfide ore concentrating, leaching, solution extraction and electrowinning. In addition, the Candelaria/Ojos del Salado, Bagdad, Sierrita and Chino/Cobre segments produce gold and silver. The Bagdad, Sierrita and Chino mines produce molybdenum and rhenium as by-products.

     The Manufacturing segment consists of conversion facilities including our smelters, refineries and rod mills. The Manufacturing segment processes copper produced at our mining operations and copper purchased from others into copper anode, cathode and rod. In addition, at times it smelts and refines copper and produces copper rod for customers on a toll basis. Toll arrangements require the tolling customer to deliver appropriate copper-bearing material to our facilities, which we then process into a product that is returned to the customer. The customer pays PDMC for processing its material into the specified products.

     The Sales segment functions as an agent to sell copper from our copper production and manufacturing segments. It also purchases and sells any copper not sold by our South American mines to third parties. Copper is sold to others primarily as rod, cathode or concentrate, and as rod to PDI’s Wire and Cable segment.

     The Primary Molybdenum segment consists of the Henderson and Climax mines, related conversion facilities and a technology center. This segment is an integrated producer of molybdenum, with mining, roasting and processing facilities producing high-purity, molybdenum-based chemicals, molybdenum metal powder and metallurgical products. In addition, at times it roasts and/or processes material on a toll basis. Toll arrangements require the tolling customer to deliver appropriate molybdenum-bearing material to our facilities, which we then process into a product that is returned to the customer. The customer pays PDMC for processing its material into the specified products. This segment also includes a technology center that directs its primary activities at developing, marketing and selling new engineered products and applications.

     Major operating and financial results of PDMC for the quarter and nine-month periods ended September 30, 2005 and 2004, are summarized in the following tables:

(Unaudited; $ in millions except per pound amounts)

	Third Quarter
	2005			2004
Sales and other operating revenues to unaffiliated customers	$	1,859.7			1,420.3
Operating income	$	618.4			423.4
Operating income before special items and provisions	$	626.9			431.3
Minority interests in consolidated subsidiaries	$	(49.8	)		(41.9	)
Copper production (thousand short tons):
Total copper production		319.5			337.6
Less undivided interest (A)		15.3			16.1
Copper production on a consolidated basis		304.2			321.5
Less minority participants’ shares (B)		48.0			42.9
Copper production on a pro rata basis		256.2			278.6
Copper sales (thousand short tons):
Total copper sales from own mines		318.7			341.6
Less undivided interest (A)		15.3			16.1
Copper sales from own mines on a consolidated basis		303.4			325.5
Less minority participants’ shares (B)		48.3			41.0
Copper sales from own mines on a pro rata basis		255.1			284.5
Purchased copper (thousand short tons)		123.8			103.8
Total copper sales on a consolidated basis		427.2			429.3
LME average spot copper price per pound — cathodes	$	1.704			1.293
COMEX average spot copper price per pound — cathodes	$	1.701			1.287
Molybdenum production (million pounds)		16.4			15.1
Molybdenum sales (million pounds):
Net Phelps Dodge share from own mines		14.8			15.4
Purchased molybdenum		2.9			3.3
Total molybdenum sales		17.7			18.7
Metals Week:
Molybdenum Dealer Oxide mean price per pound	$	30.74			16.90

26

(Unaudited; $ in millions except per pound amounts)

	Nine Months Ended
	September 30,
	2005			2004
Sales and other operating revenues to unaffiliated customers	$	5,162.2			3,889.3
Operating income	$	1,373.5			1,090.3
Operating income before special items and provisions	$	1,802.9			1,100.7
Minority interests in consolidated subsidiaries	$	(112.9	)		(145.6	)
Copper production (thousand short tons):
Total copper production		966.2			976.6
Less undivided interest (A)		44.6			47.2
Copper production on a consolidated basis		921.6			929.4
Less minority participants’ shares (B)		134.0			133.8
Copper production on a pro rata basis		787.6			795.6
Copper sales (thousand short tons):
Total copper sales from own mines		971.7			986.7
Less undivided interest (A)		44.6			47.2
Copper sales from own mines on a consolidated basis		927.1			939.5
Less minority participants’ shares (B)		136.1			134.7
Copper sales from own mines on a pro rata basis		791.0			804.8
Purchased copper (thousand short tons)		295.0			335.6
Total copper sales on a consolidated basis		1,222.1			1,275.1
LME average spot copper price per pound — cathodes	$	1.575			1.266
COMEX average spot copper price per pound — cathodes	$	1.567			1.251
Molybdenum production (million pounds)		47.8			43.4
Molybdenum sales (million pounds):
Net Phelps Dodge share from own mines		45.2			46.6
Purchased molybdenum		9.8			9.8
Total molybdenum sales		55.0			56.4
Metals Week:
Molybdenum Dealer Oxide mean price per pound	$	32.44			13.25

(A)

Represents a 15 percent undivided interest in Morenci, Arizona, copper mining complex held by Sumitomo Metal Mining Arizona, Inc.

(B)

Minority participant interests include (i) a 20 percent partnership interest in Candelaria in Chile held by SMMA Candelaria, Inc., a jointly owned indirect subsidiary of Sumitomo Metal Mining Co., Ltd., and Sumitomo Corporation, (ii) a 49 percent partnership interest in the El Abra copper mining operation in Chile held by Corporación Nacional del Cobre de Chile (CODELCO), and (iii) a 17.5 percent equity interest through May 31, 2005, and a 46.4 percent equity interest beginning June 1, 2005, in the Cerro Verde copper mining operation in Peru held primarily by Sumitomo Metal Mining Co., Ltd. and Sumitomo Corporation, and Compañia de Minas Buenaventura S.A.A.

(thousand short tons)

	Third Quarter
	2005		2004
Minority participants’ share of copper production:
Candelaria		8.3		10.1
Cerro Verde		12.3		4.3
El Abra		27.4		28.5
		48.0		42.9

(thousand short tons)

	Nine Months Ended
	September 30,
	2005		2004
Minority participants’ share of copper production:
Candelaria		27.2		31.5
Cerro Verde		23.6		13.0
El Abra		83.2		89.3
		134.0		133.8

Total PDMC Division — Sales

     PDMC’s sales and other operating revenues to unaffiliated customers increased $439.4 million, or 31 percent, in the 2005 third quarter compared with the 2004 third quarter. The increase reflected higher average copper realizations (approximately $256 million) and higher average molybdenum realizations (approximately $207 million); partially offset by higher markdown of concentrates from cathode realized prices due to higher treatment and refining charges (approximately $19 million) and lower copper sales volumes, including purchased copper (approximately $9 million).

     PDMC’s sales and other operating revenues to unaffiliated customers increased $1,272.9 million, or 33 percent, in the first nine months of 2005 compared with the corresponding 2004 period. The increase reflected higher average molybdenum realizations (approximately $822 million), higher average copper realizations (approximately $616 million) and higher precious metals and by-product sales (approximately $10 million); partially offset by lower copper sales volumes, including purchased copper (approximately $134 million) and higher markdown of concentrates from cathode realized prices due to higher treatment and refining charges (approximately $55 million).

Total PDMC — Operating Income

     PDMC reported operating income of $618.4 million for the 2005 third quarter, including special, net pre-tax charges of $8.5 million, compared with operating income of $423.4 million for the 2004 third quarter, including special, net pre-tax charges of $7.9 million. The increase in operating income of $195.0 million, or 46 percent, primarily was due to the effects of higher copper prices (approximately $178 million), including premiums and copper pricing adjustments, and higher molybdenum earnings, including earnings from primary molybdenum mines (approximately $55 million) and by-product molybdenum contribution (approximately $130 million) primarily due to higher prices. These were partially offset by higher copper production costs (approximately $124 million), lower sales volumes (approximately $29 million) and higher exploration and research expense (approximately $11 million). Higher copper production costs, which exclude by-product molybdenum revenues, were primarily due to higher mining and milling costs due generally to higher mining rates and repairs and maintenance (approximately $85 million), higher energy costs (approximately $30 million) and higher smelting, refining and freight costs (approximately $10 million).

     PDMC reported operating income of $1,373.5 million for the first nine months of 2005, including special, net pre-tax charges of $429.4 million, compared with operating income of $1,090.3 million for the first nine months of 2004, including special, net pre-tax charges of $10.4 million. The increase in operating income of $283.2 million, or 26 percent, primarily included the effects of higher copper prices

27

(approximately $450 million), including premiums and copper pricing adjustments, and higher molybdenum earnings, including earnings from primary molybdenum mines (approximately $195 million) and by-product molybdenum contribution (approximately $453 million) primarily due to higher prices. These were partially offset by higher special, net pre-tax charges ($419.0 million) mostly associated with asset impairment charges recorded in the 2005 second quarter, higher copper production costs (approximately $365 million), higher exploration and research expense (approximately $27 million), and lower sales volumes (approximately $14 million). Higher copper production costs, which exclude by-product molybdenum revenues, were primarily due to higher mining and milling costs due generally to higher mining rates, repairs and maintenance and the operational impacts of unusually heavy rainfall for the southwest United States in the first quarter of 2005 (approximately $219 million), higher energy costs (approximately $82 million) and higher smelting, refining and freight costs (approximately $72 million); partially offset by higher precious metal by-product revenues (approximately $7 million).

     For both 2005 and 2004, the higher average copper prices, including premiums, reflected strong copper fundamentals and a favorable economic environment.

     The New York Commodity Exchange (COMEX) spot price per pound of copper cathode, upon which we primarily base our U.S. sales, averaged $1.701 and $1.287 in the third quarters of 2005 and 2004, respectively, and $1.567 and $1.251 for the first nine months of 2005 and 2004, respectively. The London Metal Exchange (LME) spot price per pound of copper cathode, upon which we primarily base our international sales, averaged $1.704 and $1.293 in the third quarters of 2005 and 2004, respectively, and $1.575 and $1.266 for the first nine months of 2005 and 2004, respectively.

     Any material change in the price we receive for copper, or in PDMC’s cost of copper production, has a significant effect on our results. Based on expected 2005 annual production of approximately 2.5 billion pounds of copper, each 1 cent per pound change in the average annual copper price, or in average annual cost of copper production, causes a variation in annual operating income, excluding the impact of our copper collars as discussed below and before taxes and adjustment for minority interest, of approximately $25 million.

     Certain of PDMC’s sales agreements provide for provisional pricing based on either COMEX or LME (as specified in the contract) when shipped. Final settlement is based on the average applicable price for a specified future period (quotational period or QP), generally from one to three months after arrival at the customer’s facility. PDMC records revenues upon passage of title using anticipated pricing based on the commodity exchange forward rate. For accounting purposes, these revenues are adjusted to fair value through earnings each period until the date of final copper pricing. At September 30, 2005, approximately 235 million pounds of copper sales were provisionally priced at an average of $1.740 per pound with final quotational periods of October 2005 to January 2006. Candelaria accounted for approximately 60 percent of the outstanding, provisionally priced sales at September 30, 2005.

     Phelps Dodge has entered into copper swap contracts to protect certain provisionally priced sales exposures in a manner designed to allow it to receive the average LME price for the month of shipment while our Candelaria customers receive the QP price they requested (i.e., one to three months after month of arrival at the customer’s facility). As of October 26, 2005, we had in place copper swap contracts for approximately 98 percent of Candelaria’s provisionally priced copper sales outstanding at September 30, 2005, at an average of $1.673 per pound. This program is expected to substantially alleviate the volatility that provisionally priced copper sales could have on our revenues.

     Phelps Dodge has entered into programs to protect a portion of its expected global copper production by purchasing zero-premium copper collars and copper put options. The copper collars and the copper put options are settled on an average London Metal Exchange (LME) pricing basis for their respective hedge periods. The copper collar put options are settled monthly for 2005 and 2006, and annually for 2007; the copper collar call options are settled annually. The copper put options are settled monthly for 2006, and annually for 2007. Phelps Dodge entered into the programs as insurance to help ameliorate the effects of unanticipated copper price decreases.

     The following table provides a summary of PDMC’s zero-premium copper collar and copper put option programs for 2005, 2006 and 2007:

(Unaudited)

	2005			2006		2007
Copper Collars:
Pounds of zero-premium copper collars purchased (in millions)		198	(A)		564		486
Average LME put strike price (floor) per pound	$	0.943			0.954		0.950
Annual average LME call strike price (ceiling) per pound	$	1.400			1.632		2.002
Unrealized pre-tax losses for the 2005 third quarter (in millions)(B)	$	22			2		—
Unrealized pre-tax losses for the nine months ended September 30, 2005 (in millions)(B)	$	43			2		—
Copper Put Options:
Pounds of copper put options purchased (in millions)		—			564		730
Average LME put strike price per pound	$	—			0.950		0.950
Premium cost per pound	$	—			0.020		0.023

(A)	2005 excludes El Abra; refer to the table on page 28 for a summary of El Abra’s 2005 zero-premium copper collar program.
(B)	The 2005 unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617 per pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.40 per pound. The 2006 unrealized pre-tax losses resulted from the 2006 LME forward average price of $1.555 per pound exceeding a portion of our 2006 zero-premium copper collars (weighted average of $1.632 per pound).

28

     The following table provides a summary of El Abra’s 2005 zero-premium copper collar program for 2005:

(Unaudited)

	2005
El Abra Copper Collars:
Pounds of zero-premium copper collars purchased (in millions)		452
Monthly average LME put strike price (floor) per pound	$	1.000
Annual average LME call strike price (ceiling) per pound	$	1.376
Unrealized pre-tax losses for the 2005 third quarter (in millions)(A)	$	51
Unrealized pre-tax losses for the nine months ended September 30, 2005 (in millions)(A)	$	108

(A) The unrealized pre-tax losses resulted from the 2005 LME forward average price of $1.617 per pound exceeding the ceiling of our 2005 zero-premium copper collars of $1.376 per pound (approximately $26 million and $55 million for PD’s share for the quarter and nine months ended September 30, 2005, respectively).

     Transactions under these copper price protection programs do not qualify for hedge accounting treatment under SFAS No. 133 and are adjusted to fair market value each reporting period with the gain or loss recorded in earnings. The actual impact of our 2005, 2006 and 2007 zero-premium copper collar programs will not be fully determinable until the maturity of the collars at each respective year-end.

     Increasing energy prices are continuing to impact our costs. Although we mitigate extreme increases in energy costs with long-term power contracts and our price protection programs, we nevertheless pay more for our energy needs during these times of progressively higher energy prices. Energy accounted for 20.4 cents per pound of our production costs in the 2005 third quarter, compared with 14.7 cents per pound in the 2004 third quarter and 19.2 cents in the 2005 second quarter. In the 2005 third quarter, the average West Texas Intermediate (WTI) price of oil was approximately $63 per barrel. In the 2005 fourth quarter, if the base price of oil were to increase by a hypothetical $20 per barrel, our unit cost of copper production would increase by approximately 3.5 to 5.0 cents per pound.

Note: Supplemental Data

     The following tables summarize PDMC’s special items and provisions in operating income for the quarter and nine-month periods ended September 30, 2005 and 2004:

(Unaudited; $ in millions)

	2005 Third Quarter
	U.S.			South		Primary
	Mining			American		Molyb-
	Operations			Mines		denum
Environmental provisions, net		(8.7	)		—		—
Environmental insurance recoveries, net		(0.1	)		—		—
Historical legal matters		0.3			—		—
	$	(8.5	)		—		—

(Unaudited; $ in millions)

	Nine Months Ended
	September 30, 2005
	U.S.			South		Primary
	Mining			American		Molyb-
	Operations			Mines		denum
Asset impairment charges	$	(419.1	)		—		—
Environmental provisions, net		(24.4	)		—		—
Environmental insurance recoveries, net		(1.2	)		—		—
Historical legal matters		15.3			—		—
	$	(429.4	)		—		—

(Unaudited; $ in millions)

	2004 Third Quarter
	U.S.			South		Primary
	Mining			American		Molyb-
	Operations			Mines		denum
Environmental provisions, net	$	(11.8	)		—		—
Environmental insurance recoveries, net		7.5			—		—
Asset impairment charges		(1.1	)		—		—
Historical legal matters		(2.5	)		—		—
	$	(7.9	)		—		—

(Unaudited; $ in millions)

	Nine Months Ended
	September 30, 2004
	U.S.			South		Primary
	Mining			American		Molyb-
	Operations			Mines		denum
Environmental provisions, net	$	(14.4	)		—		0.3
Environmental insurance recoveries, net		7.3			—		—
Asset impairment charges		(1.1	)		—		—
Historical legal matters		(2.5	)		—		—
	$	(10.7	)		—		0.3

Note: Our non-GAAP measure of special items may not be comparable to similarly titled measures reported by other companies.

29

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

The following tables summarize, on a segment basis, production and sales statistics, operating income (loss), special items and provisions, net, and operating income (loss) excluding special items and provisions for the third quarters 2005 and 2004:

	U.S. Mines
									Miami/			Chino/
	Morenci			Bagdad		Sierrita			Bisbee			Cobre			Tyrone			Subtotal
Third Quarter 2005
Copper production (thousand short tons):
Total production		102.1			25.3		18.7			3.2			25.6			9.6			184.5
Less undivided interest		15.3			—		—			—			—			—			15.3
Copper production on a consolidated basis		86.8			25.3		18.7			3.2			25.6			9.6			169.2
Less minority participants’ shares		—			—		—			—			—			—			—
Copper production on a pro rata basis		86.8			25.3		18.7			3.2			25.6			9.6			169.2
Copper sales (thousand short tons):
Total copper sales from own mines		102.1			25.3		18.6			3.1			25.6			9.6			184.3
Less undivided interest		15.3			—		—			—			—			—			15.3
Copper sales from own mines on a consolidated basis		86.8			25.3		18.6			3.1			25.6			9.6			169.0
Less minority participants’ shares		—			—		—			—			—			—			—
Copper sales from own mines on a pro rata basis		86.8			25.3		18.6			3.1			25.6			9.6			169.0
Total purchased copper (thousand short tons)		—			—		—			—			—			—			—
Total copper sales on a consolidated basis		86.8			25.3		18.6			3.1			25.6			9.6			169.0
($ in millions)
Operating income (loss)	$	128.6			112.4		145.3			1.4			18.6			3.0			409.3
Special items and provisions, net		0.4			—		(8.6	)		(0.1	)		—			—			(8.3	)
Operating income (loss) excluding special items and provisions	$	128.2			112.4		153.9			1.5			18.6			3.0			417.6
Third Quarter 2004
Copper production (thousand short tons):
Total production		107.6			30.4		19.9			2.4			29.0			11.1			200.4
Less undivided interest		16.1			—		—			—			—			—			16.1
Copper production on a consolidated basis		91.5			30.4		19.9			2.4			29.0			11.1			184.3
Less minority participants’ shares		—			—		—			—			—			—			—
Copper production on a pro rata basis		91.5			30.4		19.9			2.4			29.0			11.1			184.3
Copper sales (thousand short tons):
Total copper sales from own mines		107.9			32.9		22.1			3.8			29.0			11.1			206.8
Less undivided interest		16.1			—		—			—			—			—			16.1
Copper sales from own mines on a consolidated basis		91.8			32.9		22.1			3.8			29.0			11.1			190.7
Less minority participants’ shares		—			—		—			—			—			—			—
Copper sales from own mines on a pro rata basis		91.8			32.9		22.1			3.8			29.0			11.1			190.7
Total purchased copper (thousand short tons)		—			—		—			—			—			—			—
Total copper sales on a consolidated basis		91.8			32.9		22.1			3.8			29.0			11.1			190.7
($ in millions)
Operating income (loss)	$	100.4			57.6		82.0			(0.8	)		16.7			7.2			263.1
Special items and provisions, net		(0.1	)		—		—			(0.1	)		(0.2	)		(1.5	)		(1.9	)
Operating income (loss) excluding special items and provisions	$	100.5			57.6		82.0			(0.7	)		16.9			8.7			265.0

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

30

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

	South American Mines
	Candelaria/
	Ojos del
	Salado		Cerro Verde		El Abra		Subtotal
Third Quarter 2005
Copper production (thousand short tons):
Total production		52.1		26.6		55.8		134.5
Less undivided interest		—		—		—		—
Copper production on a consolidated basis		52.1		26.6		55.8		134.5
Less minority participants’ shares		8.3		12.3		27.4		48.0
Copper production on a pro rata basis		43.8		14.3		28.4		86.5
Copper sales (thousand short tons):
Total copper sales from own mines		49.9		26.2		57.8		133.9
Less undivided interest		—		—		—		—
Copper sales from own mines on a consolidated basis		49.9		26.2		57.8		133.9
Less minority participants’ shares		7.9		12.1		28.3		48.3
Copper sales from own mines on a pro rata basis		42.0		14.1		29.5		85.6
Total purchased copper (thousand short tons)		9.1		—		—		9.1
Total copper sales on a consolidated basis		59.0		26.2		57.8		143.0
($ in millions)
Operating income (loss)	$	73.1		55.8		52.6		181.5
Special items and provisions, net		—		—		—		—
Operating income (loss) excluding special items and provisions	$	73.1		55.8		52.6		181.5
Third Quarter 2004
Copper production (thousand short tons):
Total production		54.1		24.5		58.0		136.6
Less undivided interest		—		—		—		—
Copper production on a consolidated basis		54.1		24.5		58.0		136.6
Less minority participants’ shares		10.1		4.3		28.5		42.9
Copper production on a pro rata basis		44.0		20.2		29.5		93.7
Copper sales (thousand short tons):
Total copper sales from own mines		56.2		24.5		53.5		134.2
Less undivided interest		—		—		—		—
Copper sales from own mines on a consolidated basis		56.2		24.5		53.5		134.2
Less minority participants’ shares		10.5		4.3		26.2		41.0
Copper sales from own mines on a pro rata basis		45.7		20.2		27.3		93.2
Total purchased copper (thousand short tons)		5.0		—		—		5.0
Total copper sales on a consolidated basis		61.2		24.5		53.5		139.2
($ in millions)
Operating income (loss)	$	77.2		32.5		63.3		173.0
Special items and provisions, net		—		—		—		—
Operating income (loss) excluding special items and provisions	$	77.2		32.5		63.3		173.0

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

31

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

	Primary							PDMC						Total
	Molybdenum		Manufacturing			Sales		Segments			Other			PDMC
Third Quarter 2005
Copper production (thousand short tons):
Total production		—		(0.1	)		—		318.9			0.6			319.5
Less undivided interest		—		—			—		15.3			—			15.3
Copper production on a consolidated basis		—		(0.1	)		—		303.6			0.6			304.2
Less minority participants’ shares		—		—			—		48.0			—			48.0
Copper production on a pro rata basis		—		(0.1	)		—		255.6			0.6			256.2
Copper sales (thousand short tons):
Total copper sales from own mines		—		(0.1	)		—		318.1			0.6			318.7
Less undivided interest		—		—			—		15.3			—			15.3
Copper sales from own mines on a consolidated basis		—		(0.1	)		—		302.8			0.6			303.4
Less minority participants’ shares		—		—			—		48.3			—			48.3
Copper sales from own mines on a pro rata basis		—		(0.1	)		—		254.5			0.6			255.1
Total purchased copper (thousand short tons)		—		108.5			6.2		123.8			—			123.8
Total copper sales on a consolidated basis		—		108.4			6.2		426.6			0.6			427.2
Molybdenum production (thousand pounds):
Primary — Henderson		8,386		—			—		8,386			—			8,386
By-product		7,996		—			—		7,996			—			7,996
Total production		16,382		—			—		16,382			—			16,382
Molybdenum sales (thousand pounds):
Net Phelps Dodge share from own mines		14,754		—			—		14,754			—			14,754
Purchased molybdenum		2,953		—			—		2,953			—			2,953
Total molybdenum sales		17,707		—			—		17,707			—			17,707
($ in millions)
Operating income (loss)	$	71.9		0.3			2.3		665.3			(46.9	)		618.4
Special items and provisions, net		—		0.1			—		(8.2	)		(0.3	)		(8.5	)
Operating income (loss) excluding special items and provisions	$	71.9		0.2			2.3		673.5			(46.6	)		626.9

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

32

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

	Primary							PDMC						Total
	Molybdenum		Manufacturing			Sales		Segments			Other			PDMC
Third Quarter 2004
Copper production (thousand short tons):
Total production		—		0.6			—		337.6			—			337.6
Less undivided interest		—		—			—		16.1			—			16.1
Copper production on a consolidated basis		—		0.6			—		321.5			—			321.5
Less minority participants’ shares		—		—			—		42.9			—			42.9
Copper production on a pro rata basis		—		0.6			—		278.6			—			278.6
Copper sales (thousand short tons):
Total copper sales from own mines		—		0.6			—		341.6			—			341.6
Less undivided interest		—		—			—		16.1			—			16.1
Copper sales from own mines on a consolidated basis		—		0.6			—		325.5			—			325.5
Less minority participants’ shares		—		—			—		41.0			—			41.0
Copper sales from own mines on a pro rata basis		—		0.6			—		284.5			—			284.5
Total purchased copper (thousand short tons)		—		98.3			0.5		103.8			—			103.8
Total copper sales on a consolidated basis		—		98.9			0.5		429.3			—			429.3
Molybdenum production (thousand pounds):
Primary — Henderson		6,794		—			—		6,794			—			6,794
By-product		8,277		—			—		8,277			—			8,277
Total production		15,071		—			—		15,071			—			15,071
Molybdenum sales (thousand pounds):
Net Phelps Dodge share from own mines		15,466		—			—		15,466			—			15,466
Purchased molybdenum		3,264		—			—		3,264			—			3,264
Total molybdenum sales		18,730		—			—		18,730			—			18,730
($ in millions)
Operating income (loss)	$	17.3		5.5			1.6		460.5			(37.1	)		423.4
Special items and provisions, net		—		(3.1	)		—		(5.0	)		(2.9	)		(7.9	)
Operating income (loss) excluding special items and provisions	$	17.3		8.6			1.6		465.5			(34.2	)		431.3

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

33

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

The following tables summarize, on a segment basis, production and sales statistics, operating income (loss), special items and provisions, net, and operating income (loss) excluding special items and provisions for the nine months ended September 30, 2005 and 2004:

	U.S. Mines
									Miami/			Chino/
	Morenci			Bagdad		Sierrita			Bisbee			Cobre			Tyrone			Subtotal
Nine Months Ended September 30, 2005
Copper production (thousand short tons):
Total production		297.2			80.3		60.1			9.2			79.0			30.9			556.7
Less undivided interest		44.6			—		—			—			—			—			44.6
Copper production on a consolidated basis		252.6			80.3		60.1			9.2			79.0			30.9			512.1
Less minority participants’ shares		—			—		—			—			—			—			—
Copper production on a pro rata basis		252.6			80.3		60.1			9.2			79.0			30.9			512.1
Copper sales (thousand short tons):
Total copper sales from own mines		297.2			81.6		61.3			9.9			79.0			30.9			559.9
Less undivided interest		44.6			—		—			—			—			—			44.6
Copper sales from own mines on a consolidated basis		252.6			81.6		61.3			9.9			79.0			30.9			515.3
Less minority participants’ shares		—			—		—			—			—			—			—
Copper sales from own mines on a pro rata basis		252.6			81.6		61.3			9.9			79.0			30.9			515.3
Total purchased copper (thousand short tons)		—			—		—			—			—			—			—
Total copper sales on a consolidated basis		252.6			81.6		61.3			9.9			79.0			30.9			515.3
($ in millions)
Operating income (loss)	$	328.7			313.3		415.4			4.6			(15.3	)		(208.2	)		838.5
Special items and provisions, net		(0.2	)		—		(8.6	)		(0.1	)		(64.5	)		(215.7	)		(289.1	)
Operating income (loss) excluding special items and provisions	$	328.9			313.3		424.0			4.7			49.2			7.5			1,127.6
Nine Months Ended September 30, 2004
Copper production (thousand short tons):
Total production		314.9			81.9		56.5			7.1			62.7			32.8			555.9
Less undivided interest		47.2			—		—			—			—			—			47.2
Copper production on a consolidated basis		267.7			81.9		56.5			7.1			62.7			32.8			508.7
Less minority participants’ shares		—			—		—			—			—			—			—
Copper production on a pro rata basis		267.7			81.9		56.5			7.1			62.7			32.8			508.7
Copper sales (thousand short tons):
Total copper sales from own mines		314.9			84.3		58.6			8.5			62.7			32.8			561.8
Less undivided interest		47.2			—		—			—			—			—			47.2
Copper sales from own mines on a consolidated basis		267.7			84.3		58.6			8.5			62.7			32.8			514.6
Less minority participants’ shares		—			—		—			—			—			—			—
Copper sales from own mines on a pro rata basis		267.7			84.3		58.6			8.5			62.7			32.8			514.6
Total purchased copper (thousand short tons)		—			—		—			—			—			—			—
Total copper sales on a consolidated basis		267.7			84.3		58.6			8.5			62.7			32.8			514.6
($ in millions)
Operating income (loss)	$	264.8			103.8		182.1			(4.6	)		41.7			16.2			604.0
Special items and provisions, net		(0.5	)		—		—			(0.1	)		(0.6	)		(3.3	)		(4.5	)
Operating income (loss) excluding special items and provisions	$	265.3			103.8		182.1			(4.5	)		42.3			19.5			608.5

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

34

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

	South American Mines
	Candelaria/
	Ojos del
	Salado		Cerro Verde		El Abra		Subtotal
Nine Months Ended September 30, 2005
Copper production (thousand short tons):
Total production		159.6		76.6		169.7		405.9
Less undivided interest		—		—		—		—
Copper production on a consolidated basis		159.6		76.6		169.7		405.9
Less minority participants’ shares		27.2		23.6		83.2		134.0
Copper production on a pro rata basis		132.4		53.0		86.5		271.9
Copper sales (thousand short tons):
Total copper sales from own mines		158.6		74.3		175.3		408.2
Less undivided interest		—		—		—		—
Copper sales from own mines on a consolidated basis		158.6		74.3		175.3		408.2
Less minority participants’ shares		27.0		23.2		85.9		136.1
Copper sales from own mines on a pro rata basis		131.6		51.1		89.4		272.1
Total purchased copper (thousand short tons)		15.5		—		—		15.5
Total copper sales on a consolidated basis		174.1		74.3		175.3		423.7
($ in millions)
Operating income (loss)	$	213.1		131.4		160.9		505.4
Special items and provisions, net		—		—		—		—
Operating income (loss) excluding special items and provisions	$	213.1		131.4		160.9		505.4
Nine Months Ended September 30, 2004
Copper production (thousand short tons):
Total production		162.6		74.2		182.2		419.0
Less undivided interest		—		—		—		—
Copper production on a consolidated basis		162.6		74.2		182.2		419.0
Less minority participants’ shares		31.5		13.0		89.3		133.8
Copper production on a pro rata basis		131.1		61.2		92.9		285.2
Copper sales (thousand short tons):
Total copper sales from own mines		164.7		75.6		182.9		423.2
Less undivided interest		—		—		—		—
Copper sales from own mines on a consolidated basis		164.7		75.6		182.9		423.2
Less minority participants’ shares		31.9		13.2		89.6		134.7
Copper sales from own mines on a pro rata basis		132.8		62.4		93.3		288.5
Total purchased copper (thousand short tons)		25.1		—		—		25.1
Total copper sales on a consolidated basis		189.8		75.6		182.9		448.3
($ in millions)
Operating income (loss)	$	195.3		95.4		202.5		493.2
Special items and provisions, net		—		—		—		—
Operating income (loss) excluding special items and provisions	$	195.3		95.4		202.5		493.2

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

35

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

	Primary							PDMC						Total
	Molybdenum		Manufacturing			Sales		Segments			Other			PDMC
Nine Months Ended September 30, 2005
Copper production (thousand short tons):
Total production		—		1.7			—		964.3			1.9			966.2
Less undivided interest		—		—			—		44.6			—			44.6
Copper production on a consolidated basis		—		1.7			—		919.7			1.9			921.6
Less minority participants’ shares		—		—			—		134.0			—			134.0
Copper production on a pro rata basis		—		1.7			—		785.7			1.9			787.6
Copper sales (thousand short tons):
Total copper sales from own mines		—		1.7			—		969.8			1.9			971.7
Less undivided interest		—		—			—		44.6			—			44.6
Copper sales from own mines on a consolidated basis		—		1.7			—		925.2			1.9			927.1
Less minority participants’ shares		—		—			—		136.1			—			136.1
Copper sales from own mines on a pro rata basis		—		1.7			—		789.1			1.9			791.0
Total purchased copper (thousand short tons)		—		266.1			13.4		295.0			—			295.0
Total copper sales on a consolidated basis		—		267.8			13.4		1,220.2			1.9			1,222.1
Molybdenum production (thousand pounds):
Primary — Henderson		25,279		—			—		25,279			—			25,279
By-product		22,482		—			—		22,482			—			22,482
Total production		47,761		—			—		47,761			—			47,761
Molybdenum sales (thousand pounds):
Net Phelps Dodge share from own mines		45,184		—			—		45,184			—			45,184
Purchased molybdenum		9,784		—			—		9,784			—			9,784
Total molybdenum sales		54,968		—			—		54,968			—			54,968
($ in millions)
Operating income (loss)	$	257.4		(137.4	)		1.8		1,465.7			(92.2	)		1,373.5
Special items and provisions, net		—		(148.6	)		—		(437.7	)		8.3			(429.4	)
Operating income (loss) excluding special items and provisions	$	257.4		11.2			1.8		1,903.4			(100.5	)		1,802.9

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

36

PDMC RESULTS BY REPORTABLE SEGMENTS
(Unaudited)

	Primary							PDMC
	Molybdenum		Manufacturing			Sales		Segments			Other			Total PDMC
Nine Months Ended September 30, 2004
Copper production (thousand short tons):
Total production		—		1.7			—		976.6			—			976.6
Less undivided interest		—		—			—		47.2			—			47.2
Copper production on a consolidated basis		—		1.7			—		929.4			—			929.4
Less minority participants’ shares		—		—			—		133.8			—			133.8
Copper production on a pro rata basis		—		1.7			—		795.6			—			795.6
Copper sales (thousand short tons):
Total copper sales from own mines		—		1.7			—		986.7			—			986.7
Less undivided interest		—		—			—		47.2			—			47.2
Copper sales from own mines on a consolidated basis		—		1.7			—		939.5			—			939.5
Less minority participants’ shares		—		—			—		134.7			—			134.7
Copper sales from own mines on a pro rata basis		—		1.7			—		804.8			—			804.8
Total purchased copper (thousand short tons)		—		308.9			1.6		335.6			—			335.6
Total copper sales on a consolidated basis		—		310.6			1.6		1,275.1			—			1,275.1
Molybdenum production (thousand pounds):
Primary — Henderson		20,307		—			—		20,307			—			20,307
By-product		23,075		—			—		23,075			—			23,075
Total production		43,382		—			—		43,382			—			43,382
Molybdenum sales (thousand pounds):
Net Phelps Dodge share from own mines		46,614		—			—		46,614			—			46,614
Purchased molybdenum		9,796		—			—		9,796			—			9,796
Total molybdenum sales		56,410		—			—		56,410			—			56,410
($ in millions)
Operating income (loss)	$	62.7		17.0			2.8		1,179.7			(89.4	)		1,090.3
Special items and provisions, net		0.3		(3.1	)		—		(7.3	)		(3.1	)		(10.4	)
Operating income (loss) excluding special items and provisions	$	62.4		20.1			2.8		1,187.0			(86.3	)		1,100.7

Refer to segment discussion on pages 37 through 42.

Revenues, operating costs and expenses of PDMC’s segments include allocations that may not be reflective of market conditions. Additionally, certain costs are not allocated to the reportable segments. (Refer to pages 37 and 38 for further discussion.)

37

Sales of Copper (U.S. and South America) and Molybdenum

     The Manufacturing and Sales segments are responsible for selling all copper produced at the U.S. mines. Intersegment revenues of the individual U.S. mines represent an internal allocation based on PDMC’s sales to unaffiliated customers. Therefore, the following discussion and analysis combines the U.S. Mine segments with the Manufacturing and Sales segments, along with other mining activities. The Sales segment purchases and sells any copper not sold by the South American mines to third parties. The South American mines sold approximately 49 percent and 35 percent of their copper to the Sales segment in the third quarters of 2005 and 2004, respectively, and 48 percent and 41 percent for the first nine months of 2005 and 2004, respectively. Intersegment sales by the South American mines are based upon arms-length prices at the time of the sale. Intersegment sales of any individual mine may not be reflective of the actual prices PDMC ultimately receives due to a variety of factors including additional processing, timing of sales to unaffiliated customers and transportation premiums. These sales are reflected in the Manufacturing and Sales segments.

(Unaudited; $ in millions)

	Third Quarter
	2005			2004
U.S. Mining Operations*
Unaffiliated customers	$	1,165.8			902.4
Intersegment elimination		(220.4	)		(135.0	)
		945.4			767.4
South American Mines**
Unaffiliated customers		225.9			250.8
Intersegment		220.4			135.0
		446.3			385.8
Primary Molybdenum
Unaffiliated customers		468.0			267.1
Intersegment		—			—
		468.0			267.1
Total PDMC
Unaffiliated customers	$	1,859.7			1,420.3

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005			2004
U.S. Mining Operations*
Unaffiliated customers	$	3,049.3			2,573.8
Intersegment elimination		(585.1	)		(477.2	)
		2,464.2			2,096.6
South American Mines**
Unaffiliated customers		642.0			673.3
Intersegment		585.1			477.2
		1,227.1			1,150.5
Primary Molybdenum
Unaffiliated customers		1,470.9			642.2
Intersegment		—			—
		1,470.9			642.2
Total PDMC
Unaffiliated customers	$	5,162.2			3,889.3

*	U.S. Mining Operations comprised the following reportable segments: Morenci, Bagdad, Sierrita, Miami/Bisbee, Chino/Cobre, Tyrone, Manufacturing and Sales, along with other mining activities.
**	South American Mines comprised the following segments: Candelaria/Ojos del Salado, Cerro Verde and El Abra.

U.S. Mining Operations — Sales

     Sales and other operating revenues by U.S. Mining Operations increased $178.0 million, or 23 percent, in the 2005 third quarter compared with the 2004 third quarter. This increase primarily was due to higher realized copper prices (approximately $198 million); partially offset by lower copper sales volumes (approximately $21 million) and higher markdown of concentrates from cathode realized prices due to higher treatment and refining charges (approximately $10 million).

     Sales and other operating revenues by U.S. Mining Operations increased $367.6 million, or 18 percent, in the first nine months of 2005 compared with the corresponding 2004 period. This increase primarily was due to higher realized copper prices (approximately $449 million); partially offset by lower copper sales volumes (approximately $71 million) and higher markdown of concentrates from cathode realized prices due to higher treatment and refining charges (approximately $25 million).

South American Mines Segment — Sales

     Sales and other operating revenues by South American Mines increased $60.5 million, or 16 percent, in the 2005 third quarter compared with the 2004 third quarter. This increase was due to higher realized copper prices (approximately $58 million) and higher copper sales volumes (approximately $12 million); partially offset by higher markdown of concentrates from cathode realized prices due to higher treatment and refining charges (approximately $9 million).

     Sales and other operating revenues by South American Mines increased $76.6 million, or 7 percent, in the first nine months of 2005 compared with the corresponding 2004 period. This increase was due to higher realized copper prices (approximately $167 million); partially offset by lower copper sales volumes (approximately $63 million) and higher markdown of concentrates from cathode realized

38

prices due to higher treatment and refining charges (approximately $30 million).

Primary Molybdenum Segment — Sales

     Primary Molybdenum sales and other operating revenues to unaffiliated customers increased $200.9 million, or 75 percent, in the 2005 third quarter compared with the 2004 third quarter. This increase primarily was due to higher average molybdenum realizations (approximately $207 million) and higher molybdenum tolling revenue (approximately $7 million); partially offset by slightly lower molybdenum sales volumes (approximately $14 million).

     Primary Molybdenum sales and other operating revenues to unaffiliated customers increased $828.7 million, or 129 percent, in the first nine months of 2005 compared with the corresponding 2004 period. This increase primarily was due to higher average molybdenum realizations (approximately $822 million) and higher molybdenum tolling revenue (approximately $20 million); partially offset by slightly lower molybdenum sales volumes (approximately $16 million).

Operating Income for Copper (U.S. and South America) and Molybdenum

     In addition to the allocation of revenues, management allocates certain operating costs, expenses and capital to PDMC’s segments that may not be reflective of market conditions. We also do not allocate all costs and expenses applicable to a mine or operation from the division or corporate offices. Accordingly, the segment information reflects management determinations that may not be indicative of actual financial performance of each segment as if it was an independent entity.

Note: Supplemental Data

     The following tables summarize PDMC’s operating income, special pre-tax items and provisions, and the resultant earnings excluding these special items and provisions for the quarter and nine-month periods ended September 30, 2005 and 2004:

(Unaudited; $ in millions)

	Third Quarter
	2005			2004
Segment operating income:
U.S. Mining Operations*	$	365.0			233.1
South American Mines**		181.5			173.0
Primary Molybdenum		71.9			17.3
	$	618.4			423.4
Special, pre-tax items and provisions:
U.S. Mining Operations*	$	(8.5	)		(7.9	)
South American Mines**		—			—
Primary Molybdenum		—			—
	$	(8.5	)		(7.9	)
Segment operating income excluding special items and provisions:
U.S. Mining Operations*	$	373.5			241.0
South American Mines**		181.5			173.0
Primary Molybdenum		71.9			17.3
	$	626.9			431.3

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005			2004
Segment operating income:
U.S. Mining Operations*	$	610.7			534.4
South American Mines**		505.4			493.2
Primary Molybdenum		257.4			62.7
	$	1,373.5			1,090.3
Special, pre-tax items and provisions:
U.S. Mining Operations*	$	(429.4	)		(10.7	)
South American Mines**		—			—
Primary Molybdenum		—			0.3
	$	(429.4	)		(10.4	)
Segment operating income excluding special items and provisions:
U.S. Mining Operations*	$	1,040.1			545.1
South American Mines**		505.4			493.2
Primary Molybdenum		257.4			62.4
	$	1,802.9			1,100.7

*	U.S. Mining Operations comprised the following reportable segments: Morenci, Bagdad, Sierrita, Miami/Bisbee, Chino/Cobre, Tyrone, Manufacturing and Sales, along with other mining activities.
**	South American Mines comprised the following segments: Candelaria/Ojos del Salado, Cerro Verde and El Abra.

Note: Our non-GAAP measure of special items and provisions may not be comparable to similarly titled measures reported by other companies.

U.S. Mining Operations — Operating Income

     U.S. Mining Operations reported operating income of $365.0 million including special, net pre-tax charges of $8.5 million for the 2005 third quarter, compared with operating income of $233.1 million including special, net charges of $7.9 million for the 2004 third quarter.

     U.S. Mining Operations reported operating income of $610.7 million including special, net pre-tax charges of $429.4 million for the first nine months of 2005, compared with operating income of $534.4 million including special, net pre-tax charges of $10.7 million in the corresponding 2004 period. (Refer to the separate discussion of PDMC’s segments below for further detail.)

Morenci Segment — Operating Income

     The Morenci open-pit mine, located in southeastern Arizona, primarily produces electrowon copper cathodes. We own an 85 percent undivided interest in Morenci and apply the proportional consolidation method of accounting.

     On June 1, 2005, the Company’s board of directors approved expenditures of $210 million to construct a concentrate-leach, direct electrowinning facility at the Morenci copper mine, and to restart its concentrator, which has been idle since 2001. The new facility will employ proprietary technology that has been developed and is under demonstration at the Bagdad copper mine, and is expected to begin operations in 2007. Concentrate leach technology, in conjunction with a conventional milling and flotation concentrator, allows copper sulfide ores to be transformed into copper cathode through the efficient pressure leaching and electrowinning process instead of smelting and refining. Historically, sulfide ores have been processed into copper anodes through a smelter. This decision had conse-

39

quences for several of our other southwest copper operations, resulting in the impairment of certain assets. (Refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion.)

     Operating income of $128.6 million for the 2005 third quarter increased $28.2 million compared with the 2004 third quarter primarily due to higher average copper prices (approximately $58 million); partially offset by lower sales volume (approximately $12 million) and higher cost of copper production (approximately $18 million) primarily due to higher supply costs, and higher repair costs associated with the initial preparations for the restart of milling operations.

     Operating income of $328.7 million for the first nine months of 2005 increased $63.9 million compared with the corresponding 2004 period primarily due to higher average copper prices (approximately $143 million); partially offset by higher cost of copper production (approximately $44 million) and lower sales volume (approximately $37 million). Higher cost of copper production primarily was due to higher operating and repair costs (approximately $57 million) primarily associated with higher supply costs, 2005 first quarter weather-related events and the initial preparations for the restart of milling operations, and higher cathode freight costs (approximately $4 million); partially offset by lower depreciation expense (approximately $9 million) primarily associated with lower production and depreciation rates and a decrease in work-in-process inventories (approximately $7 million).

Bagdad Segment — Operating Income

     Our wholly owned Bagdad open-pit mine, located in northwest Arizona, produces copper and molybdenum concentrates and electrowon copper cathodes.

     Operating income of $112.4 million for the 2005 third quarter increased $54.8 million compared with the 2004 third quarter primarily due to higher by-product molybdenum revenues resulting from higher average prices and volumes (approximately $58 million) and higher average copper prices (approximately $18 million); partially offset by lower sales volume (approximately $16 million) and higher cost of copper production (approximately $6 million), which excludes by-product molybdenum revenues, primarily due to higher energy, supply and maintenance costs.

     Operating income of $313.3 million for the first nine months of 2005 increased $209.5 million compared with the corresponding 2004 period primarily due to higher by-product molybdenum revenues resulting from higher average prices and volumes (approximately $212 million) and higher average copper prices (approximately $46 million); partially offset by higher cost of copper production (approximately $43 million), which excludes by-product molybdenum revenues, and lower sales volumes (approximately $5 million). Higher cost of copper production primarily was due to (i) higher energy, labor, supply and maintenance costs (approximately $20 million), (ii) higher smelting, refining and freight costs (approximately $9 million) resulting from higher concentrate production volume, (iii) higher depreciation expense (approximately $5 million) associated with higher depreciation rates, (iv) higher severance and property taxes (approximately $3 million) resulting from higher copper and molybdenum prices, and (v) the mitigation of damage and additional costs necessitated by record rainfall in the 2005 first quarter (approximately $4 million).

Sierrita Segment — Operating Income

     Our wholly owned Sierrita open-pit mine, located near Green Valley, Arizona, produces copper concentrates, electrowon copper cathodes, copper sulfates and molybdenum products.

     Operating income of $145.3 million for the 2005 third quarter increased $63.3 million compared with the 2004 third quarter primarily due to higher by-product molybdenum revenues resulting from higher average prices (approximately $71 million) and higher average copper prices (approximately $14 million); partially offset by higher special, net pre-tax charges for environmental provisions ($8.6 million), lower sales volume (approximately $6 million) and higher cost of copper production (approximately $7 million), which excludes by-product molybdenum revenues, primarily due to higher mining and milling rates associated with ramped-up capacity.

     Operating income of $415.4 million for the first nine months of 2005 increased $233.3 million compared with the corresponding 2004 period primarily due to higher by-product molybdenum revenues resulting from higher average prices (approximately $229 million), higher average copper prices (approximately $35 million) and higher sales volume (approximately $8 million); partially offset by higher cost of copper production (approximately $30 million), which excludes by-product molybdenum revenues, and higher special, net pre-tax charges for environmental provisions ($8.6 million). Higher cost of copper production primarily was due to (i) higher mining and milling rates (approximately $17 million) associated with ramped-up capacity, (ii) higher diesel and maintenance costs (approximately $6 million), (iii) higher severance and property taxes (approximately $4 million) resulting from higher copper and molybdenum prices, and (iv) costs associated with increased copper cathode production volume (approximately $2 million).

Miami/Bisbee Segment — Operating Income (Loss)

     Our wholly owned Miami open-pit mine, located in Miami, Arizona, produces electrowon copper cathodes. The Company’s interest in the Copreco venture that operates the water treatment/copper recovery facility in Bisbee, located in southern Arizona, is accounted for on an equity basis.

     Operating income of $1.4 million for the 2005 third quarter increased $2.2 million compared with the 2004 third quarter primarily due to higher average copper prices (approximately $2 million).

     Operating income of $4.6 million for the first nine months of 2005 increased $9.2 million compared with the corresponding 2004 period primarily due to higher sales volumes (approximately $5 million) and higher average copper prices (approximately $6 million).

Chino/Cobre Segment — Operating Income (Loss)

     Our wholly owned Chino open-pit mine, located near Silver City, New Mexico, produces electrowon copper cathodes and copper concentrates. The segment also includes our wholly owned Cobre mine, which is adjacent to the Chino mine. Our Cobre mine is on care-and-maintenance status with the exception of certain limited mining activities.

     Operating income of $18.6 million for the 2005 third quarter increased by $1.9 million compared with the 2004 third quarter

40

primarily due to higher average copper prices (approximately $20 million); partially offset by higher cost of copper production (approximately $10 million), which excludes by-product molybdenum revenues, and lower sales volume (approximately $8 million). Higher cost of copper production primarily was due to higher mining and milling costs (approximately $14 million) due to the restart of milling operations and ramp-up of mining operations, including increased stripping costs; partially offset by the impact of changes in heap-leach and work-in-process inventories (approximately $8 million).

     An operating loss of $15.3 million for the first nine months of 2005 was unfavorable by $57.0 million compared with the corresponding 2004 period primarily due to higher special, net pre-tax charges ($63.9 million) primarily associated with asset impairment charges of $59.9 million recorded at Cobre in the 2005 second quarter (refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion) and higher cost of copper production (approximately $91 million), which excludes by-product molybdenum revenues; partially offset by higher copper sales volumes (approximately $41 million), higher average copper prices (approximately $46 million) and by-product molybdenum revenues resulting from higher average prices and volumes (approximately $12 million). Higher cost of copper production primarily was due to (i) higher mining and milling costs (approximately $61 million) resulting from the restart of milling operations and ramp-up of mining operations, including increased stripping costs, (ii) higher smelting and refining costs related to increased concentrate production (approximately $16 million), (iii) the impact of changes in heap-leach and work-in-process inventories (approximately $7 million), and (iv) higher depreciation expense (approximately $6 million) due to higher production volumes and straight-line depreciation of equipment.

Tyrone Segment — Operating Income (Loss)

     Our wholly owned Tyrone open-pit mine, located near Tyrone, New Mexico, produces electrowon copper cathodes.

     Operating income of $3.0 million for the 2005 third quarter decreased by $4.2 million compared with the 2004 third quarter primarily due to higher mining costs resulting from an increase in tons mined (approximately $11 million) and lower sales volumes (approximately $4 million); partially offset by the effect of higher average copper prices (approximately $7 million) and lower special, net pre-tax charges ($1.5 million).

     An operating loss of $208.2 million for the first nine months of 2005 was unfavorable by $224.4 million compared with the corresponding 2004 period primarily due to higher special, net pre-tax charges ($212.4 million) primarily associated with asset impairment charges of $210.5 million recorded in the 2005 second quarter (refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion), higher mining costs resulting from an increase in tons mined (approximately $30 million) and lower sales volume (approximately $5 million); partially offset by the effect of higher average copper prices (approximately $17 million) and the impact of changes in heap-leach and work-in-process inventories (approximately $5 million).

Manufacturing Segment — Operating Income (Loss)

     Operating income of $0.3 million for the 2005 third quarter decreased by $5.2 million compared with the 2004 third quarter primarily due to higher smelter amortization (approximately $5 million) mostly due to the early maintenance turnaround of the Miami smelter in July 2005 and higher rod mill costs (approximately $3 million) primarily associated with higher energy costs; partially offset by lower special, net pre-tax charges ($3.2 million).

     An operating loss of $137.4 million for the first nine months of 2005 was unfavorable by $154.4 million compared with the corresponding 2004 period primarily due to higher special, net pre-tax charges ($145.5 million) associated with asset impairment charges of $89.6 million and $59.1 million recorded at the Chino smelter and Miami refinery, respectively, in the 2005 second quarter (refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion), higher costs associated with a fire at our Norwich rod mill on January 7, 2005 (approximately $4 million), and higher smelter amortization (approximately $4 million) mostly due to the early maintenance turnaround of the Miami smelter in July 2005.

South American Mines — Operating Income

     South American Mines reported operating income in the 2005 third quarter of $181.5 million, compared with operating income of $173.0 million in the 2004 third quarter.

     South American Mines reported operating income of $505.4 million for the first nine months of 2005, compared with operating income of $493.2 million for the corresponding 2004 period. (Refer to the separate discussion of PDMC’s segments below for further detail.)

Candelaria/Ojos del Salado Segment — Operating Income

     The Candelaria open-pit and underground mine, located near Copiapó in northern Chile, produces copper concentrates. The segment also includes the wholly owned, nearby Ojos del Salado underground mines that produce copper concentrates. We own an 80 percent partnership interest in Candelaria, a Chilean contractual mining company, which we fully consolidate (and report minority interest).

     In October 2005, two new four-year agreements covering approximately 415 employees were signed. These agreements expire in October 2009.

     Operating income of $73.1 million for the 2005 third quarter decreased $4.1 million compared with the 2004 third quarter primarily due to higher cost of copper production (approximately $23 million) and lower sales volume (approximately $15 million); partially offset by higher average copper prices (approximately $33 million). Higher cost of copper production primarily was due to higher mining and milling costs (approximately $14 million) primarily associated with higher energy, repair and supply costs, higher smelting and refining costs (approximately $8 million) and the impact of changes in work-in-process inventories (approximately $5 million); partially offset by higher precious metals by-product revenues (approximately $3 million).

     Operating income of $213.1 million for the first nine months of 2005 increased $17.8 million compared with the corresponding 2004

41

period primarily due to higher average copper prices (approximately $97 million); partially offset by higher cost of copper production (approximately $65 million) and lower sales volumes (approximately $13 million). Higher cost of copper production primarily was due to higher mining and milling costs (approximately $28 million) associated with higher energy, repair and supply costs, the ramp-up of production at Ojos del Salado (approximately $21 million), higher smelting and refining costs (approximately $20 million) and the impact of changes in work-in-process inventories (approximately $3 million); partially offset by lower depreciation expense (approximately $10 million) primarily due to increased ore reserves.

Cerro Verde Segment — Operating Income

     The Cerro Verde open-pit mine, located near Arequipa, Peru, produces electrowon copper cathodes. On June 1, 2005, Sociedad Minera Cerro Verde S.A.A. (Cerro Verde) completed a general capital increase transaction. The transaction resulted in Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp., known collectively as Sumitomo, acquiring an equity position in Cerro Verde totaling 21.0 percent. In addition, Compañia de Minas Buenaventura S.A.A. (Buenaventura) increased its ownership position in Cerro Verde to 18.2 percent. The remaining minority shareholders who own shares publicly traded on the Lima Stock Exchange own 7.2 percent of Cerro Verde. As a result of the transaction, Cerro Verde received cash of $441.8 million (net of $1.0 million of expenses) and Phelps Dodge’s interest in Cerro Verde was reduced to 53.6 percent from 82.5 percent. Phelps Dodge continues to maintain a majority interest in Cerro Verde, which we fully consolidate (and report minority interest). (Refer to Change in Interest Gain from Cerro Verde Stock Issuance at page 47 for additional discussion.)

     Operating income of $55.8 million for the 2005 third quarter increased $23.3 million compared with the 2004 third quarter primarily due to higher average copper prices (approximately $23 million).

     Operating income of $131.4 million for the first nine months of 2005 increased $36.0 million compared with the corresponding 2004 period primarily due to higher average copper prices (approximately $50 million); partially offset by higher cost of copper production (approximately $14 million) primarily due to higher acid, energy, and repair and maintenance costs.

     On October 11, 2004, the Phelps Dodge board of directors announced conditional approval of an approximate $850 million expansion of the Cerro Verde mine. In early February 2005, the board unconditionally approved proceeding with project development simultaneously with the financing efforts. On September 30, 2005, the Company entered into a number of agreements in connection with obtaining debt-financing facilities in the overall amount of $450 million for the expansion. (Refer to PDMC - Other Matters on pages 42 and 43 for additional discussion of the Cerro Verde mine expansion.)

El Abra Segment — Operating Income

     The El Abra open-pit mine, located in northern Chile, produces electrowon copper cathodes. We own a 51 percent partnership interest in El Abra, a Chilean contractual mining company, and the remaining 49 percent interest is owned by Corporación Nacional del Cobre de Chile (CODELCO), a Chilean state-owned company. We fully consolidate El Abra (and report minority interest).

     Operating income of $52.6 million for the 2005 third quarter decreased $10.7 million compared with the 2004 third quarter primarily due to higher production costs (approximately $14 million), which were partially offset by higher sales volume (approximately $5 million). Higher cost of copper production primarily was due to higher acid and energy costs (approximately $6 million) and leased equipment and maintenance costs (approximately $6 million); partially offset by the impact of changes in heap-leach and work-in-process inventories (approximately $2 million). Average copper prices benefited from higher LME prices (approximately $51 million), but were offset by the mark-to-market effects of copper collars related to 2005 production (approximately $51 million).

     Operating income of $160.9 million for the first nine months of 2005 decreased $41.6 million compared with the corresponding 2004 period primarily due to lower sales volumes (approximately $27 million) and higher production costs (approximately $24 million); partially offset by higher average copper prices (approximately $9 million). Higher production costs were primarily due to higher acid, energy costs and contracted services (approximately $20 million), leased equipment and maintenance costs (approximately $9 million), the unfavorable impact of exchange rates (approximately $5 million) and higher freight (approximately $3 million); partially offset by the impact of changes in heap-leach and work-in-process inventories (approximately $15 million). Average copper prices benefited from higher LME prices (approximately $117 million), but were offset by the mark-to-market effects of copper collars related to 2005 production (approximately $108 million).

Primary Molybdenum — Operating Income

     Primary Molybdenum includes our wholly owned Henderson and Climax molybdenum mines in Colorado and conversion facilities in the United States and Europe. Henderson produces high-purity, chemical-grade molybdenum concentrates, which are further processed into value-added molybdenum chemical products. The Climax mine is currently on care-and-maintenance status. We expect to bring it into production concurrent with the exhaustion of the Henderson molybdenum mine reserves for continued long-term primary molybdenum supply for the chemicals business. Nonetheless, we continue to evaluate short- and mid-term production opportunities for the Climax mine based on market conditions and projects as well as manage the facility in a manner that allows its production to commence in a timely and efficient manner.

     Our expected 2005 molybdenum production is approximately 64 million pounds (approximately 33 million pounds from primary mines and 31 million pounds from by-product mines). Approximately 70 percent of our molybdenum sales are priced based on published prices (i.e., Platts Metals Week, Ryan’s Notes, or Metal Bulletin), plus premiums. The majority of these sales use the average of the previous month (i.e., price quotation period is the month prior to shipment, or M-1). The other sales generally have pricing that is either based on a fixed price or adjusts within certain price ranges. Based upon the assumption that approximately 70 percent of our molybdenum sales, depending on customer and product mix at the time, are adjusted based on the underlying published prices, each $1.00 per pound change in our average annual realized molybdenum price causes a variation in annual operating income before taxes of approximately $43 million.

42

     Primary Molybdenum is in the process of increasing mine production capacity at its Henderson operation to 40 million pounds per year by mid-2006. The cost to add the increased capacity is expected to total $20 million to $24 million. Primary Molybdenum is also evaluating the possibility of bringing the Climax mine on line in response to market conditions. If it is brought on line, production from the Climax mine could range from 10 million to 20 million pounds a year.

     Operating income for the 2005 third quarter of $71.9 million increased $54.6 million compared with the third quarter of 2004 primarily due to higher average molybdenum realizations (approximately $207 million), lower net production costs (approximately $20 million) and higher tolling revenue due to volume and price (approximately $7 million); partially offset by higher cost of molybdenum purchased from third parties, including by-product molybdenum purchased from certain of our U.S. copper operations (approximately $164 million) and lower molybdenum sales volumes (approximately $14 million). Lower production costs primarily resulted from decreased cost of material drawn from inventory (approximately $29 million); partially offset by higher costs resulting from increased volumes and included higher labor and maintenance costs (approximately $4 million), higher tolling costs due to increased volume (approximately $3 million), and higher depreciation expense (approximately $1 million) due to higher production volumes.

     Operating income of $257.4 million for the first nine months of 2005 increased $194.7 million compared with the corresponding 2004 period primarily due to higher average molybdenum realizations (approximately $822 million), higher tolling revenue due to volume and price (approximately $20 million) and lower net production costs (approximately $12 million); partially offset by higher cost of molybdenum purchased from third parties, including by-product molybdenum purchased from certain of our U.S. copper operations (approximately $633 million), lower molybdenum sales volumes (approximately $16 million) and higher care and maintenance cost (approximately $7 million) primarily associated with the Climax mine. Lower net production costs resulted from decreased cost of material drawn from inventory (approximately $54 million); partially offset by higher costs resulting from increased volumes and included higher labor and maintenance costs (approximately $12 million), higher tolling costs due to increased volume (approximately $8 million), higher conversion costs (approximately $6 million), higher depreciation expense (approximately $5 million), higher outside service costs (approximately $4 million), higher freight and warehousing costs (approximately $4 million) and higher energy costs (approximately $3 million).

2004 Recommencement of Previously Curtailed Properties

     In January 2004, we resumed production at certain of our previously curtailed properties. This decision was based on the rapid increase in copper prices, our view of market fundamentals for copper and molybdenum over the next several years, and our internal concentrate and sulfuric acid balance. The actual production ramp-ups and timing occurred as follows:

• Our Bagdad mine in Arizona began increasing production in January 2004 and resumed producing at full capacity in the 2004 second quarter.

• Our Sierrita mine in Arizona began increasing production in January 2004 and resumed producing at full capacity in the 2004 fourth quarter.

• Our Chino mine in New Mexico began increasing production in the 2003 fourth quarter as it resumed full mine-for-leach operations. The Chino milling operation increased to approximately 80 percent of capacity in the 2004 third quarter, which better balances our concentrate and acid production in the southwest.

• Our Ojos del Salado mine in Chile, which had been curtailed since 1998, resumed underground mining and milling operations during the 2004 second quarter.

• Our Miami smelter in Arizona resumed operating at full capacity in the 2004 second quarter.

     Including the effect of the above-mentioned recommencements, we expect our pro rata share of copper production in 2005 to be 2.1 billion pounds (2.5 billion pounds on a consolidated basis); our 2005 molybdenum production is expected to total 64 million pounds.

     Even though we continue to be optimistic about the strong copper and molybdenum markets, we will remain disciplined with our production profile. We will continue to configure our operations so that we can quickly respond to both positive and negative market demand and price swings.

     At September 30, 2005, excluding the Morenci mill, we had approximately 100 million to 150 million pounds of curtailed annual copper production capacity (both our share and 100 percent basis), that could be brought to market depending on equipment availability and near-term mine plans within one to three years. This reflects a reduction from previously disclosed amounts due to Tyrone and Cobre, as these mines were impaired in the 2005 second quarter (refer to PDMC — Other Matters on pages 42 and 43 for further discussion). This curtailed capacity is located at our U.S. mine sites, all with existing infrastructures. However, additional mining equipment may be required at a cost of approximately $100 million to $150 million.

     We have additional sources of copper that could be developed; however, such additional sources would require the development of greenfield projects or major brownfield expansions that would involve significantly greater capital expenditures and far longer lead-times than would be the case for facilities on care-and-maintenance status. The capital expenditures required to develop such additional production capacity include the costs of necessary infrastructure and would be substantial. In addition, significant lead-time would be required for permitting and construction.

PDMC — Other Matters

     On June 1, 2005, the Company’s board of directors approved expenditures of $210 million to construct a commercial-scale copper concentrate leaching and direct electrowinning facility. It will be built at the Morenci copper mine and is expected to begin operations in 2007. The Morenci project resulted in the Company reassessing its operating capacity, flexibility, efficiencies and costs at its Chino smelter and Miami refinery. Accordingly, the Chino smelter and Miami refinery, which have been on care-and-maintenance status since 2002, will be closed. As a result of the decision to close the Chino smelter and the Miami refinery, in the 2005 second quarter, the Company recognized special, pre-tax impairment charges of

43

$89.6 million and $59.1 million, respectively, ($68.6 million and $45.2 million, respectively, after-tax) to reduce the related carrying values of these properties to their respective salvage values. In addition, the steps taken at Morenci prompted the Company to reassess the recoverability of the long-lived assets at both our Tyrone and Cobre mines in New Mexico. This reassessment indicated that the assets were not recoverable and that asset impairment charges were required. Accordingly, in the 2005 second quarter, the Company recognized special, pre-tax impairment charges of $210.5 million ($161.2 million after-tax) at its Tyrone mine and $59.9 million ($45.9 million after-tax) at its Cobre mine. (Refer to Note 3, Special Items and Provisions, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion.)

     On July 8, 2005, the Miami smelter was shut down to perform maintenance and repair on its furnace lining, as well as other routine maintenance. The shutdown impacted our copper production slightly and the smelter restarted on July 25, 2005.

     On October 11, 2004, the Phelps Dodge board of directors announced conditional approval of an approximate $850 million expansion of the Cerro Verde mine near Arequipa, Peru. Final approval was contingent upon obtaining financing and obtaining certain key permits and government approvals. The required permits and approvals were obtained in the 2004 fourth quarter, and in early February 2005, the board unconditionally approved proceeding with project development simultaneously with the financing efforts. On September 30, 2005, the Company entered into a number of agreements in connection with obtaining debt-financing facilities in the overall amount of $450 million for the expansion (refer to Note 11, Debt and Other Financing, to our unaudited September 30, 2005, Consolidated Financial Information, for additional information on the Cerro Verde debt-financing facilities). The $442.8 million recently invested by Buenaventura and Sumitomo to increase or establish their ownership interests in Cerro Verde is the major source of equity for the expansion.

     The expansion permits the mining of a primary sulfide ore body beneath the leachable ore body currently in production. Through the expansion, approximately 1.4 billion tons of sulfide ore reserves averaging 0.49 percent copper and 0.02 percent molybdenum will be processed through a new concentrator. Processing of the sulfide ore is expected to begin in late 2006, and the expanded production rate should be achieved in the first half of 2007. The current copper production at Cerro Verde is approximately 100,000 tons per year. After completion of the expansion, copper production is initially expected to approximate 300,000 tons per year (PD’s share would be approximately 160,700 tons per year).

     For the nine months ended September 30, 2005, approximately $171 million has been spent on the Cerro Verde expansion.

     Sumitomo has agreed in principle to purchase a 20 percent equity interest in Ojos del Salado S.A.A. (Ojos del Salado), which will result in a reduction of Phelps Dodge’s interest to 80 percent from 100 percent. Phelps Dodge will continue to retain a majority interest in Ojos del Salado, which we fully consolidate (and will report the minority interest). As a result of the transaction, Ojos del Salado expects to issue shares to Sumitomo and receive $25 million.

     In late July 2005, the Council of Ministers of the Democratic Republic of the Congo (DRC) approved the principal commercial terms under which the Tenke Fungurume copper/cobalt mining project will be developed. Amended project agreements have been negotiated and are awaiting final ratification by the government of the DRC. Upon this ratification, the project will progress into the development stage. Phelps Dodge has an option allowing it to acquire an effective 57.75 percent interest in the project.

     On September 16, 2005, the U.S. Bureau of Land Management completed a land exchange with the Company. This action allows us to advance development of the proposed copper mining operation near Safford, Arizona, including development of the Dos Pobres and San Juan copper ore bodies, about eight miles north of Safford in southeastern Arizona.

     In July 2005, the Henderson mine and mill, the Miami mine, smelter, refinery and rod plant, the El Paso refinery and rod plant, and the Norwich rod and wire plant received the International Organization for Standardization (ISO) 14001 environmental certification. The ISO is a worldwide federation of national standards bodies. The International Environmental Management System Standard, also known as 14001, is the recognized standard for environmental management as well as a benchmark for environmental excellence.

Significant New Mexico Environmental and Reclamation Programs

     The Company’s New Mexico operations, Chino, Tyrone, Cobre and Hidalgo, each are subject to regulation under the New Mexico Water Quality Act and the Water Quality Control Commission (WQCC) regulations adopted under that Act. The New Mexico Environment Department (NMED) has required each of these operations to submit closure plans for approval. The closure plans must describe the measures to be taken to prevent groundwater quality standards from being exceeded following closure of the discharging facilities and to abate any groundwater or surface water contamination.

     Chino, Tyrone and Cobre also are subject to regulation under the New Mexico Mining Act (the Mining Act), which was enacted in 1993, and the Mining Act Rules, which are administered by the Mining and Minerals Division (MMD) of the New Mexico Energy, Minerals and Natural Resources Department. Under the Mining Act, Chino, Tyrone and Cobre are required to submit and obtain approval of closeout

44

plans describing the reclamation to be performed following closure of the mines or portions of the mines.

     Financial assurance is required to ensure that funding will be available to perform both the closure plans and the closeout plans if the operator is not able to perform the work required by the plans. The amount of the financial assurance is based upon the estimated cost for a third party to complete the work specified in the plans, including any long-term operation and maintenance, such as operation of water treatment systems. NMED and MMD calculate the required amount of financial assurance based upon a “net present value” (NPV) method, based upon approved discount and escalation rates, when the closure plan and/or closeout plan require performance over a long period of time.

     In April 2005, the governor of New Mexico signed Senate Bill 986, effective June 17, 2005, that removes the requirement to provide financial assurance for the gross receipts tax levied on closure work. Eliminating this requirement is expected to reduce our New Mexico financial assurance by approximately $27 million (NPV basis).

     The Company’s cost estimates to perform the work itself (internal cost basis) generally are substantially lower than the cost estimates used for financial assurance due to the Company’s historical cost advantages, savings from the use of the Company’s own personnel and equipment as opposed to third-party contractor costs, and opportunities to prepare the site for more efficient reclamation as mining progresses.

     Refer to Note 6, Contingencies, to our unaudited September 30, 2005, Consolidated Financial Information, for additional information.

RESULTS OF PHELPS DODGE INDUSTRIES

     PDI, our manufacturing division, produces engineered products principally for the global energy, transportation and specialty chemicals sectors. Its operations are characterized by products with significant market share, internationally competitive cost and quality, and specialized engineering capabilities. The manufacturing division includes our Specialty Chemicals segment and our Wire and Cable segment. Our Specialty Chemicals segment includes Columbian Chemicals Company and its subsidiaries (Columbian Chemicals or Columbian). Our Wire and Cable segment consists of three worldwide product line businesses including magnet wire, energy cables, and specialty conductors.

     The Company is continuing to explore strategic alternatives for PDI that may include potential subsidiary sales, selective asset sales, restructurings, joint ventures and mergers, or, alternatively, retention and selective growth. No decision has yet been made to proceed with any such transaction and no assurance can be given that a transaction will be concluded. Whether any such transaction would result in the recognition of a gain or loss depends on the final purchase price and other terms and cannot yet be determined. On September 6, 2005, the Phelps Dodge board of directors approved plans for Specialty Chemicals to build a new carbon black manufacturing facility in Bahia, Brazil, at a greenfield location in the Camacari petrochemical complex in the northeastern area of Brazil.

(Unaudited; $ in millions)

	Third Quarter
	2005		2004
Sales and other operating revenues to unaffiliated customers:
Specialty Chemicals	$	180.8		171.1
Wire and Cable		319.3		255.1
	$	500.1		426.2
Operating income:
Specialty Chemicals	$	7.6		5.1
Wire and Cable		9.4		7.4
	$	17.0		12.5

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005		2004
Sales and other operating revenues to unaffiliated customers:
Specialty Chemicals	$	546.4		500.2
Wire and Cable		869.3		704.9
	$	1,415.7		1,205.1
Operating income:
Specialty Chemicals	$	29.7		32.2
Wire and Cable		26.7		16.0
	$	56.4		48.2

PDI — Sales

     PDI reported sales to unaffiliated customers of $500.1 million for the 2005 third quarter, compared with sales of $426.2 million for the 2004 third quarter. The increase of $73.9 million was due to higher Wire and Cable sales that increased $64.2 million primarily as a result of increased metal prices and increased demand for energy cables and building wire in the international and domestic markets (approximately $56 million) and favorable foreign exchange rate impacts (approximately $7 million). Additionally, Specialty Chemicals sales increased $9.7 million primarily due to improved pricing mostly associated with the pass-through of a portion of higher feedstock oil costs to customers and negotiated price increases (approximately $20 million) and favorable foreign exchange impacts (approximately $11 million); partially offset by lower sales volumes (approximately $21 million) primarily in Europe and North America.

     PDI reported sales to unaffiliated customers of $1,415.7 million for the first nine months of 2005, compared with sales of $1,205.1 million in the corresponding 2004 period. The increase of $210.6 million was due to higher Wire and Cable sales that increased $164.4 million primarily as a result of increased metal prices and increased demand for energy cables and building wire in the international markets (approximately $145 million) and favorable foreign exchange rate impacts (approximately $14 million). Additionally, Specialty Chemicals sales increased $46.2 million primarily due to improved pricing primarily associated with the pass-through of a portion of higher feedstock oil costs to customers and negotiated price increases (approximately $39 million) and foreign exchange impacts (approximately $34 million); partially offset by lower sales volumes (approximately $27 million) primarily in Europe.

45

PDI — Operating Income

     PDI reported operating income of $17.0 million for the 2005 third quarter, including special, net pre-tax charges of $1.8 million, compared with operating income of $12.5 million for the 2004 third quarter including special, net pre-tax charges of $3.3 million.

     PDI reported operating income of $56.4 million for the first nine months of 2005, including special, net pre-tax charges of $3.3 million, compared with operating income of $48.2 million for the first nine months of 2004, including special, net pre-tax charges of $7.6 million. (Refer to the separate discussion of PDI’s Specialty Chemicals and Wire and Cable segments below for further detail.)

Note: Supplemental Data

     The following tables summarize PDI’s operating income, special items and provisions and the resultant earnings excluding these special items and provisions for the quarter and nine-month periods ended September 30, 2005 and 2004:

(Unaudited; $ in millions)

	Third Quarter
	2005			2004
Operating income	$	17.0			12.5
Special, pre-tax items and provisions		(1.8	)		(3.3	)
Segment operating income excluding special items and provisions	$	18.8			15.8

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005			2004
Operating income	$	56.4			48.2
Special, pre-tax items and provisions		(3.3	)		(7.6	)
Segment operating income excluding special items and provisions	$	59.7			55.8

Note: Our non-GAAP measure of special items and provisions may not be comparable to similarly titled measures reported by other companies.

Note: Supplemental Data

     The following tables summarize PDI’s special items and provisions, all of which related to Wire and Cable, for the quarter and nine-month periods ended September 30, 2005 and 2004:

(Unaudited; $ in millions)

	Third Quarter
	2005			2004
Environmental provisions, net	$	(0.1	)		(0.2	)
Wire and Cable restructuring programs/closures		0.3			(3.1	)
Asset impairment charges		(2.0	)		—
	$	(1.8	)		(3.3	)

(Unaudited; $ in millions)

	Nine Months Ended
	September 30,
	2005			2004
Environmental provisions, net	$	(0.1	)		(0.3	)
Wire and Cable restructuring programs/closures		(0.8	)		(6.7	)
Asset impairment charges		(2.4	)		(0.6	)
	$	(3.3	)		(7.6	)

Specialty Chemicals — Operating Income

     Specialty Chemicals reported operating income of $7.6 million for the 2005 third quarter, compared with operating income of $5.1 million for the 2004 third quarter. The increase of $2.5 million primarily was due to higher variable margins (approximately $5 million) primarily driven by favorable foreign exchange rate impacts, which were offset by higher feedstock costs resulting from the rise in oil prices, and lower costs (approximately $4 million) mostly resulting from operational restructuring activities; partially offset by lower sales volumes (approximately $7 million) primarily in Europe and North America.

     Specialty Chemicals reported operating income of $29.7 million for the first nine months of 2005, compared with operating income of $32.2 million for the first nine months of 2004. The decrease of $2.5 million primarily was due to lower sales volumes (approximately $10 million) primarily in Europe, and higher costs (approximately $4 million) mostly associated with accelerated depreciation for 2005 operational restructuring activities; partially offset by improved variable margins (approximately $11 million) reflecting higher prices, the pass through of a portion of higher feedstock costs and favorable foreign exchange rate impacts.

     In August 2005 and October 2005, Specialty Chemicals’ Sevalco, U.K., and Marshall, West Virginia, carbon black plants received the ISO 14001 environmental certification. These plants are the last two Specialty Chemicals’ operating carbon black plants to receive the certification. Specialty Chemicals is the only major global carbon black company to receive the ISO 14001 environmental certification for all of its operating plants.

Wire and Cable — Operating Income

     Wire and Cable reported operating income of $9.4 million, including special, net pre-tax charges of $1.8 million for the 2005 third quarter, compared with operating income of $7.4 million, including special, net pre-tax charges of $3.3 million for the 2004 third quarter. The increase of $2.0 million primarily was due to lower depreciation

46

expense (approximately $2 million), improved margins and higher sales volumes for energy cables and building wire in the international markets (approximately $1 million) and the impact of lower special, net pre-tax charges ($1.5 million); partially offset by lower sales volumes and margins for magnet wire and specialty conductors (approximately $3 million).

     Wire and Cable reported operating income of $26.7 million, including special, net pre-tax charges of $3.3 million for the first nine months of 2005, compared with operating income of $16.0 million, including special, net pre-tax charges of $7.6 million for the corresponding 2004 period. The increase of $10.7 million primarily was due to improved margins and higher sales volumes for energy cables and building wire in the international markets (approximately $9 million), lower depreciation expense (approximately $4 million) and lower special, net pre-tax charges ($4.3 million); partially offset by lower sales volumes and margins for magnet wire and specialty conductors (approximately $6 million).

OTHER MATTERS RELATING TO THE CONSOLIDATED STATEMENT OF INCOME

Cost of Products Sold

     Cost of products sold was $1,550.6 million for the 2005 third quarter, compared with $1,246.5 million for the 2004 third quarter. The increase of $304.1 million primarily was attributable to higher purchased cathode and concentrate (approximately $146 million) due to lower production volumes, an increase in copper and molybdenum production costs (approximately $88 million — refer to PDMC’s segments on pages 37 to 42 for further discussion), higher costs of molybdenum purchased from third parties (approximately $34 million) and increases at our Wire and Cable segment for third-party raw material purchases and higher sales volumes (approximately $39 million).

     Cost of products sold was $4,220.0 million for the first nine months of 2005, compared with $3,478.5 million for the corresponding 2004 period. The increase of $741.5 million primarily was attributable to an increase in copper and molybdenum production costs (approximately $343 million - refer to PDMC’s segments on pages 37 to 42 for further discussion), higher costs of molybdenum purchased from third parties (approximately $179 million), increases at our Wire and Cable segment for third-party raw material purchases and higher sales volumes (approximately $124 million) and higher purchased cathode and concentrate (approximately $88 million) due to lower production volumes.

Selling and General Administrative Expense

     Selling and general administrative expense was $48.3 million for the 2005 third quarter, compared with $42.0 million for the 2004 third quarter. The increase of $6.3 million primarily resulted from higher contributions to charitable organizations (approximately $4 million).

     Selling and general administrative expense was $136.1 million for the first nine months of 2005, compared with $114.7 million for the corresponding 2004 period. The increase of $21.4 million primarily resulted from contributions to the Phelps Dodge Foundation and other charitable organizations (approximately $10 million), higher employee incentive and variable compensation expense (approximately $4 million), and higher restricted stock amortization (approximately $3 million).

Exploration and Research Expense

     Net exploration and research expense was $27.1 million for the 2005 third quarter, compared with $15.8 million for the 2004 third quarter. The increase of $11.3 million resulted from higher PDMC research expense (approximately $2 million) primarily due to increased project development work by the Process Technology Center in Safford, Arizona, and higher exploration spending (approximately $9 million) primarily in central Africa and at U.S. mines.

     Net exploration and research expense was $72.6 million for the first nine months of 2005, compared with $44.9 million for the corresponding 2004 period. The increase of $27.7 million resulted from higher PDMC research expense (approximately $13 million) primarily due to increased project development work by the Process Technology Center in Safford, Arizona, and higher exploration spending (approximately $14 million) primarily in central Africa and at U.S. mines.

Interest Expense

     Interest expense, net of capitalized interest, was $12.0 million for the 2005 third quarter, compared with $28.9 million for the 2004 third quarter. The decrease of $16.9 million primarily was attributable to net reductions associated with the repayment of long-term debt during 2004 and 2005 (approximately $11 million) and higher capitalized interest (approximately $7 million) primarily associated with the Cerro Verde expansion.

     Interest expense, net of capitalized interest, was $56.2 million for the first nine months of 2005, compared with $99.9 million for the corresponding 2004 period. The decrease of $43.7 million primarily was attributable to net reductions associated with the repayment of long-term debt during 2004 and 2005 (approximately $36 million) and higher capitalized interest (approximately $9 million) primarily associated with the Cerro Verde expansion.

Early Debt Extinguishment Costs

     In July 2005, the Company completed a tender offer for its 8.75 percent Notes due in 2011, which resulted in the retirement of long-term debt with a book value of approximately $280 million (representing approximately 72 percent of the outstanding notes). This resulted in a 2005 third quarter special, pre-tax charge of $54.0 million ($41.3 million after-tax), including purchase premiums, for early debt extinguishment costs.

     In June 2004, the Company completed the full repayment of Candelaria’s senior debt and executed the termination and release of the existing financing obligations and associated security package with the bank group. The full repayment of long-term debt with a book value of approximately $166 million, including the June 2004 scheduled payment, resulted in a 2004 special pre-tax charge of $15.2 million before minority interest ($10.1 million after-tax and net of minority interest impact) for early debt extinguishment costs, including unamortized issuance costs and the unwinding of associated floating-to-fixed interest rate swaps.

     In March 2004, the Company redeemed its 8.375 percent debentures due in 2023. These debentures had a book value of approxi-

47

mately $149 million and were redeemed for a total of $152.7 million, plus accrued interest. This resulted in a 2004 first quarter special, pre-tax charge of $3.9 million ($3.1 million after-tax) for early debt extinguishment costs, including purchase premiums.

     In March 2004, the Company completed tender offers for its 6.625 percent Notes due in 2005 and its 7.375 percent Notes due in 2007. The tender offers resulted in the retirement of long-term debt with a book value of approximately $305 million, which resulted in a 2004 first quarter special, pre-tax charge of $18.5 million ($14.5 million after-tax) for early debt extinguishment costs, including purchase premiums.

Gain on Sale of Cost-Basis Investment

     On June 9, 2005, the Company entered into an Underwriting Agreement with Citigroup Global Markets, Inc., UBS Securities LLC, Southern Peru Copper Corporation (SPCC), Cerro Trading Company, Inc. and SPC Investors, LLC. On June 15, 2005, pursuant to the Underwriting Agreement, the Company sold all of its SPCC common shares to the underwriters for a net purchase price of $40.635 per share (based on a market purchase price of $42.00 per share less underwriting fees). This transaction resulted in a special, pre-tax gain of $438.4 million ($388.0 million after-tax).

Change in Interest Gain from Cerro Verde Stock Issuance

     In the 2005 second quarter, Cerro Verde completed a general capital increase transaction. The transaction resulted in Sumitomo acquiring an equity position in Cerro Verde totaling 21.0 percent. In addition, Buenaventura increased its ownership position in Cerro Verde to 18.2 percent, and the remaining minority shareholders who own shares publicly traded on the Lima Stock Exchange owned 7.2 percent of Cerro Verde. As a result of the transaction, Phelps Dodge’s interest in Cerro Verde was reduced to 53.6 percent from 82.5 percent.

     In connection with the transaction, Cerro Verde issued 122.7 million of its common shares at $3.6074 per share to Sumitomo, Buenaventura and the remaining minority shareholders, and received $441.8 million in cash (net of $1.0 million of expenses). The stock issuance transactions resulted in a special, pre-tax gain of $159.5 million ($172.9 million after-tax) for Phelps Dodge associated with our change of interest. The $13.4 million tax benefit related to this transaction included a reduction in deferred tax liabilities ($16.1 million) resulting from the recognition of certain book adjustments to reflect dilution of our ownership interest; partially offset by taxes charged ($2.7 million) on the transfer of stock subscription rights to Buenaventura and Sumitomo. The capital increase will be used to partially finance an approximate $850 million expansion to mine a primary sulfide ore body beneath the leachable ore body currently in production at Cerro Verde. The cash received in this transaction from Sumitomo may only be used for the sulfide project and is reflected as restricted cash for reporting purposes. At September 30, 2005, restricted cash associated with the sulfide project was $79.7 million, compared with $168.3 million at June 30, 2005. (Refer to PDMC — Other Matters on pages 42 and 43 for additional discussion of the Cerro Verde mine expansion.)

Miscellaneous Income and Expense, Net

     Miscellaneous income and expense, net was $24.2 million for the 2005 third quarter, compared with $21.6 million for the 2004 third quarter. The increase of $2.6 million resulted primarily from higher interest income ($18.1 million); partially offset by lower dividend income ($7.7 million) resulting from the sale of SPCC in the 2005 second quarter, and the absence of a 2004 gain on the settlement of an historical legal matter ($9.5 million).

     Miscellaneous income and expense, net was $86.7 million for the first nine months of 2005, compared with $25.1 million for the corresponding 2004 period. The increase of $61.6 million resulted primarily from higher dividend income ($23.0 million) primarily received from SPCC during the first half of 2005, higher interest income ($35.6 million) and the absence of the 2004 write-downs of cost-basis investments ($10.0 million); partially offset by a decrease resulting from the absence of the 2004 gain on the settlement of an historical legal matter ($9.5 million).

Provision for Taxes on Income

     The Company’s income tax provision for the 2005 third quarter resulted from taxes on earnings at U.S. operations ($57.1 million) including recognition of valuation allowances ($34.1 million), and taxes on earnings at international operations ($51.5 million) including benefits from the release of valuation allowances ($0.9 million).

     The Company’s income tax provision for the nine months ended September 30, 2005, resulted from taxes on earnings at U.S. operations ($179.2 million) including recognition of valuation allowances ($2.2 million), and taxes on earnings at international operations ($135.2 million) including recognition of valuation allowances ($0.6 million).

     The net recognition in our domestic valuation allowances for the quarter and nine months ended September 30, 2005, was attributable to a portion of our U.S. federal minimum tax credits, as well as our state net operating loss (NOL) carryforwards.

     The Company’s income tax provision for the 2004 third quarter resulted from taxes on earnings at international operations ($36.1 million) including benefits from the release of valuation allowances ($14.8 million) and taxes on earnings at U.S. operations ($26.1 million) including benefits from the release of valuation allowances ($25.7 million).

     The Company’s income tax provision for the nine months ended September 30, 2004, resulted from (i) taxes on earnings at international operations ($91.9 million) including benefits from the release of valuation allowances ($60.6 million), (ii) taxes on earnings at U.S. operations ($39.0 million) including benefits from the release of valuation allowances ($91.9 million) and (iii) the recognition of a valuation allowance for deferred tax assets at our Brazilian wire and cable operation ($9.0 million); partially offset by the reversal of the valuation allowance associated with deferred tax assets that were expected to be realized after 2004 at our 51 percent-owned El Abra copper mine ($30.8 million).

     The release of both the domestic and international valuation allowances for the quarter and nine months ended September 30, 2004, reflects NOLs and other tax credits that were expected to be utilized.

48

     (Refer to Note 8, Provision for Taxes on Income, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion of the Company’s effective income tax rate.)

CHANGES IN FINANCIAL CONDITION

Working Capital

     During the first nine months of 2005, net working capital balances (excluding cash and cash equivalents, restricted cash and debt) increased $234.3 million. This increase resulted primarily from:

• a $324.1 million increase in accounts receivable primarily due to copper receivables resulting from higher copper prices and sales volumes (approximately $188 million), repayment of securitization program (approximately $85 million) and molybdenum receivables resulting from higher molybdenum prices (approximately $52 million);

• a $69.8 million increase in inventories primarily due to lower molybdenum sales (approximately $42 million) and higher purchases at Wire and Cable mostly in anticipation of increased sales volumes (approximately $29 million);

• a $63.5 million increase in prepaid expenses and other current assets primarily due to higher prepaid taxes (approximately $39 million) that will be factored into our 2005 fourth quarter estimated tax payment, fair value adjustments associated with derivatives (approximately $9 million), the reclassification of the current portion of long-term investments (approximately $8 million) and timing of payments for insurance (approximately $3 million);

• a $38.5 million decrease in accrued income taxes primarily due to payments, net of refunds (approximately $356 million) and a tax benefit associated with stock options (approximately $36 million); partially offset by higher foreign, federal and state income tax provisions (approximately $318 million) and the reclassification of prepaid income taxes (approximately $39 million);

• a $36.1 million increase in current deferred tax assets primarily due to reclassification from non-current deferred income taxes; and

• a $19.5 million increase in supplies due to a build-up primarily associated with anticipated longer lead times for certain supplies and parts and production increases (approximately $16 million) and higher prices for acid (approximately $5 million); partially offset by

• a $320.0 million increase in accounts payable and accrued expenses mostly due to higher mark-to-market adjustments on copper collars (approximately $153 million), higher cathode and concentrate purchase (approximately $58 million), net increases in asset retirement obligation costs (approximately $60 million) and environmental reserves (approximately $17 million) primarily resulting from the reclassification of the current portions for the acceleration of certain environmental and reclamation projects, and timing of payments (approximately $19 million).

Cash and Cash Equivalents

     We manage our cash on a global basis and maintain cash at our international operations to fund local operating needs, fulfill local debt requirements and, in some cases, fund local growth opportunities or lend cash to other international operations. At September 30, 2005, consolidated cash (including restricted cash) totaled $2,505.3 million, of which $1,079.3 million was held at our international operations. Cash at our international operations is subject to foreign withholding taxes of up to 22 percent upon repatriation into the United States.

     The following table reflects the U.S. and international components of consolidated cash at September 30, 2005, and December 31, 2004:

(Unaudited; $ in millions)

	September 30,		December 31,
	2005		2004
U.S. operations:
Phelps Dodge	$	1,426.0		678.4
International operations:
Phelps Dodge		810.1		453.3
Minority participants’ shares		269.2		68.4
		1,079.3		521.7
Total consolidated cash	$	2,505.3		1,200.1

     Should the current favorable copper and molybdenum price environment continue for the foreseeable future, it is likely that our operations will continue to generate significant cash flows and cash balances.

Capital Expenditures and Investments

     Capital expenditures and investments in subsidiaries for the nine months ended September 30, 2005, totaled $403.7 million including $359.1 million for PDMC, $34.6 million for PDI and $10.0 million for other corporate-related activities. Capital expenditures and investments in subsidiaries for the corresponding 2004 period totaled $160.2 million including $115.5 million for PDMC, $33.8 million for PDI and $10.9 million for other corporate-related activities. Capital expenditures and investments in subsidiaries for the year 2005 are expected to be approximately $700 million, including approximately $620 million for PDMC, approximately $65 million for PDI, and approximately $15 million for other corporate-related activities. The increase in capital expenditures for 2005, compared with the $317.3 million spent in 2004, is primarily due to the $300 million Cerro Verde expects to spend on its expansion project in 2005 and approximately $25 million for our share of the construction costs for the Luna power plant. These capital expenditures and investments are expected to be funded primarily from operating cash flows and cash reserves. The 2005 capital expenditures for the Cerro Verde expansion project will be funded by the cash proceeds received from its equity partners, Cerro Verde cash reserves, project financing and operating cash flows.

Debt

     At September 30, 2005, our total debt was $730.7 million, compared with $1,044.2 million at June 30, 2005, and $1,096.9 million at December 31, 2004. The $366.2 million decrease in total debt from December 31, 2004, primarily was due to the July 2005 retirement of long-term debt (approximately $280 million), a net decrease in short-term borrowings (approximately $48 million) mostly associated with current year payments made at El Abra, and the full repayment of El Abra’s subordinated debt (approximately $34 million). Our ratio of debt to total capitalization was 9.8 percent at September 30, 2005, compared with 14.3 percent at June 30, 2005, and 18.3 percent at December 31, 2004.

49

     On April 1, 2005, the Company amended the agreement for its $1.1 billion revolving credit facility, extending its maturity to April 20, 2010, and slightly modifying its fee structure. The facility is to be used for general corporate purposes. The agreement permits borrowings of up to $1.1 billion, with a $300 million sub-limit for letters of credit. At September 30, 2005, there was approximately $75 million of letters of credit issued under the new revolver. Total availability under the revolving credit facility at September 30, 2005, amounted to approximately $1,025 million, of which approximately $225 million could be used for additional letters of credit. (Refer to Note 11, Debt and other Financing, to our unaudited September 30, 2005, Consolidated Financial Information, for additional discussion of the credit facility.)

     In July 2005, the Company completed a tender offer for its 8.75 percent Notes due in 2011, which resulted in the retirement of long-term debt with a book value of approximately $280 million (representing approximately 72 percent of the outstanding notes). This resulted in a 2005 third quarter special, pre-tax charge of $54.0 million ($41.3 million after-tax), including purchase premiums, for early debt extinguishment costs.

     On September 30, 2005, the Company entered into a number of agreements in connection with obtaining debt-financing facilities in the overall amount of $450 million for the expansion of the Cerro Verde copper mine (refer to PDMC — Other Matters on pages 42 and 43 for additional discussion of the Cerro Verde mine expansion). Export credit agencies and commercial banks supporting the debt-financing facility are the Japan Bank for International Cooperation (JBIC), KfW banking group of Germany (KfW), Calyon New York Branch, Mizuho Corporate Bank of Japan, Scotia Capital of Canada and the Royal Bank of Scotland. The JBIC facility also includes Sumitomo Mitsui Banking Corp. and Bank of Tokyo Mitsubishi. Phelps Dodge has guaranteed its adjusted pro rata share of the financing until completion of construction and has agreed to maintain a net worth of at least $1.5 billion. The security package associated with the debt-financing facilities includes mortgages and pledges of substantially all of the assets of Cerro Verde and requires the Company, Sumitomo and Buenaventura to pledge their respective shares of Cerro Verde.

     The financing comprises (i) a JBIC facility with two tranches totaling $247.5 million (Tranche A of $173.25 million and Tranche B of $74.25 million), (ii) a KfW facility totaling $22.5 million, and (iii) a commercial bank loan facility of $180.0 million, of which $90.0 million represents a stand-by facility intended to be replaced by the issuance of Peruvian bonds at a later date. The financing has a maximum 10-year term, and repayment consists of 16 semi-annual installments commencing on the earlier of the March 20 or the September 20 next occurring after commencement of commercial operations or March 20, 2008. Under the JBIC and commercial bank loan facilities, interest is payable at a floating rate based on LIBOR, plus a fixed margin. Under the KfW facility, interest is payable at a variable or fixed rate, determined by Cerro Verde based on market rates at the time of drawdown. At September 30, 2005, there were no borrowings under the facilities; copper market conditions and internally generated cash will determine future borrowings.

Dividends

     On June 2, 2005, Phelps Dodge increased the quarterly stock dividend from 25 cents per common share to 37.5 cents per common share. For the first nine months of 2005, Phelps Dodge paid regular quarterly dividends of 87.5 cents per common share amounting to $84.8 million. The common stock dividend for the 2005 fourth quarter will be paid on December 2, 2005, to common shareholders of record at the close of business on November 16, 2005.

     For the first nine months of 2005, Phelps Dodge paid quarterly dividends of $5.0625 per mandatory convertible preferred share amounting to $10.1 million. On August 15, 2005, the Series A Mandatory Convertible Preferred Stock (Series A Stock) was converted into 4.2 million shares of Common Stock.

50

Contractual Obligations

     The following table summarizes Phelps Dodge’s contractual obligations at September 30, 2005, and the effect such obligations are expected to have on its liquidity and cash flow in future periods. The following table, as of September 30, 2005, reflects an update of only the major changes to the similar table presented in the Company’s Form 10-K at December 31, 2004:

(Unaudited; $ in millions)

			Less Than						After
	Total		1 Year		1-3 Years		4-5 Years		5 Years
Short-term debt	$	31.1		31.1		—		—		—
Long-term debt		699.6		43.0		63.6		23.7		569.3
Scheduled interest payment obligations*		994.7		51.7		96.3		91.4		755.3
Asset retirement obligations**		70.0		33.4		20.6		10.0		6.0
Take-or-pay contracts		853.5		364.9		202.5		91.7		194.4

*

Scheduled interest payment obligations were calculated using stated coupon rates for fixed debt and interest rates applicable at September 30, 2005, for variable rate debt.

**

Asset retirement obligations only include our estimated contractual cash payments associated with reclamation activities at certain sites for which our costs are estimable and the timing of payments is reasonably determinable as of September 30, 2005. The timing and the amount of these payments could change as a result of changes in regulatory requirements, changes in scope of reclamation activities and as actual reclamation spending occurs. The table excludes cash payments of approximately $84 million that are expected to be incurred in connection with accelerating certain closure projects (refer to Others Items that May Affect Liquidity on pages 50 through 52 for further discussion of the Accelarated Projects). Additionally, we have also excluded payments for reclamation activities that are expected to occur after five years that are either not estimable and/or for which the timing is not determinable because the majority of these cash flows are expected to occur over an extended period of time commencing near the end of the mine life.

     Our take-or-pay contracts primarily include contracts for petroleum-based feedstock for conversion into carbon black (approximately $354 million), contracts for other supplies and services (approximately $176 million) of which approximately $158 million was associated with the expansion of the Cerro Verde mine, contracts for electricity (approximately $132 million), transportation and port fee commitments (approximately $82 million), contracts for copper anode for deliveries of specified volumes at market-based prices to our El Paso refinery (approximately $67 million), contracts for natural gas (approximately $20 million), contracts for sulfuric acid for deliveries of specified volumes based primarily on negotiated rates to El Abra (approximately $13 million) and oxygen obligations for deliveries of specified volumes at fixed prices to Bagdad (approximately $9 million). Approximately 57 percent of our take-or-pay electricity obligations are through PD Energy Services, the legal entity used to manage power for PDMC North American operations at generally fixed-priced arrangements. PD Energy Services has the right and the ability to resell the electricity as circumstances warrant. Obligations for petroleum-based feedstock for conversion into carbon black are for specific quantities, and ultimately will be purchased based upon prevailing market prices at the time. These petroleum-based products may be re-sold to others if circumstances warrant. Obligations for natural gas provide for deliveries of specified volumes, at market-based prices, primarily due to our carbon black operations in Brazil. Transportation obligations total approximately $61 million primarily for Candelaria contracted ocean freight rates and El Abra sulfuric acid freight arrangements. Our carbon black facility in the United Kingdom has port fee commitments of approximately $14 million over approximately 43 years. Our copper mine in Peru has port fee commitments of approximately $7 million over approximately 21 years.

Guarantees

     Financial Accounting Standards Board (FASB) Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (FIN 45), requires that upon issuance of certain guarantees, a guarantor must recognize a liability for the fair value of an obligation assumed under the guarantee. Phelps Dodge Corporation as a guarantor is involved in financial guarantees (including option guarantees and indirect guarantees of the indebtedness of others) and certain indemnity obligations. Refer to Note 19, Guarantees, of the Company’s Form 10-K for the year ended December 31, 2004, for additional discussion regarding our financial guarantee and indemnity obligations. As of September 30, 2005, there have been no significant changes in our financial guarantee obligations and no liabilities recorded in connection with our guarantees that existed as of December 31, 2004. Phelps Dodge has provided certain parent guarantees associated with the Cerro Verde debt-financing facility (refer to Note 11, Debt and Other Financing, to our unaudited September 30, 2005, Consolidated Financial Information). There were no other guarantees issued in the 2005 third quarter that had a material impact on our consolidated financial statements.

Other Items that May Affect Liquidity

     On October 20, 2005, the Company’s board of directors approved a program to return $1.5 billion in capital to shareholders by the end of 2006, to be implemented in several stages. As part of this program, the board declared a special cash dividend of $5.00 per common share, or approximately $500 million, which is payable on December 2, 2005, to shareholders of record at the close of business on November 16, 2005. Based on the Company’s current balance sheet and its view of 2006 and overall world economic conditions, the board also approved a share repurchase program of up to $1 billion. The Company, however, may issue additional special dividends in lieu of share repurchases. The timing, form and amounts of additional distributions during 2006 will depend upon market conditions and other factors.

     On July 13, 2005, the Company made a cash contribution of $250 million to the master trust that funds our U.S. qualified defined benefit pension plans. This action has funded virtually the entire projected benefit obligation for those plans as reported at December 31, 2004.

51

     On May 27, 2005, shareholders approved an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 200 million shares to 300 million shares. This increase provides additional flexibility for the Company to pursue various corporate objectives.

     The Company filed a $1 billion shelf registration statement on Form S-3 with the Securities and Exchange Commission, which was declared effective May 10, 2005, to combine the $400 million shelf registration filed April 15, 2005, and $600 million outstanding under a shelf registration statement that was declared effective on July 15, 2003. The shelf registration provides flexibility to efficiently access capital markets should financial circumstances warrant.

     On March 24, 2005, Moody’s Investors Service upgraded Phelps Dodge’s senior unsecured ratings to Baa2 (stable outlook) from Baa3 (stable outlook).

     On February 9, 2005, Standard and Poor’s Rating Services raised Phelps Dodge’s senior unsecured debt rating from BBB- (positive outlook) to BBB (positive outlook). S&P also raised the Company’s commercial paper (short-term) rating from A3 to A2.

     New Mexico and Colorado’s mined-land reclamation laws require financial assurance covering the future cost of reclamation. In contrast, Arizona’s Mine Land Reclamation Act (the Arizona Act) permits a company to satisfy financial assurance requirements by demonstrating it has financial strength to fund future reclamation costs identified in an approved reclamation plan. An investment-grade bond rating is one of the financial strength tests under the Arizona Act. Phelps Dodge’s senior unsecured debt currently carries an investment-grade rating. Additionally, the Company currently meets another financial strength test in Arizona that is not ratings dependent.

     For New Mexico, financial assurance may be provided in several forms, including third-party performance guarantees, collateral bonds, surety bonds, letters of credit and trust funds. Based upon current permit terms and agreements with the state of New Mexico, up to 70 percent of the financial assurance for Chino, Tyrone and Cobre may be provided in the form of third-party performance guarantees. Under the Mining Act Rules and the terms of the guarantees, certain financial soundness tests must be met by the guarantor. A publicly traded company may satisfy these financial tests by showing that its senior unsecured debt rating is investment grade and that it meets certain requirements regarding assets in relation to the required amount of financial assurance. Phelps Dodge has provided performance guarantees for a portion of the financial assurance required for Chino, Tyrone and Cobre. Phelps Dodge’s senior unsecured debt currently carries an investment-grade rating. If the Company’s bond rating falls below investment grade, unless a different financial soundness test is met, the New Mexico mining operations that have a performance guarantee for a portion of their financial assurance would be required to supply financial assurance in another form.

     The cost of surety bonds (the traditional source of financial assurance) has increased significantly in recent years. Also, many surety companies are now requiring an increased level of collateral supporting the bonds. If surety bonds are unavailable at commercially reasonable terms, the Company could be required to post other collateral or possibly cash or cash equivalents directly in support of financial assurance obligations.

     The Company maintains a program whereby it has the ability to sell on a continuous basis an undivided interest in certain eligible accounts receivable. PD Receivables, LLC, a wholly owned, special purpose, bankruptcy-remote subsidiary was formed for the sole purpose of buying and selling receivables generated by the Company and is consolidated with the operations of the Company. PD Receivables, LLC is permitted to receive advances of up to $90 million for the sale of such undivided interest. The transactions are accounted for as a sale of receivables under the provisions of SFAS No. 140, “Accounting for the Transfers and Servicing of Financial Assets and Extinguishment of Liabilities – a replacement of FASB Statement No. 125.” On January 20, 2005, we repaid the outstanding balance on the program of $85 million that was advanced under the receivables facility. The program remains in place on an undrawn basis.

     On June 16, 2005, the Chilean government published legislation establishing a progressive tax rate on the operational margin generated on mining activities in Chile (5 percent for companies, including our subsidiaries in Chile, whose annual sales exceed 50,000 metric tons of copper). This law is effective January 1, 2006. The impact of this law on the Company’s Chilean subsidiaries has not yet been determined and is pending issuance of regulations by the Chilean IRS, which is expected in the 2005 fourth quarter.

     On June 24, 2004, the Executive Branch of the Peruvian government approved legislation incorporating a royalty on mining activities. If payable by Cerro Verde, the royalty would be assessed at a graduated rate of up to 3 percent on the value of Cerro Verde’s sales, net of certain related expenses. It is not clear what, if any, effect the new royalty law will have on operations at Cerro Verde.

     On October 22, 2004, President Bush signed the American Jobs Creation Act of 2004 (the Act). We currently are considering the impact of the Act on our practice of reinvesting the earnings of our foreign subsidiaries. The Act provides an effective U.S. federal tax rate of 5.25 percent on certain foreign earnings repatriated during a one-year period (2005 for Phelps Dodge), but also results in the loss of any foreign tax credits associated with these earnings. The maximum amount of the Company’s foreign earnings that qualify for this one-time deduction is approximately $638 million. At the present time, other than the amount provided for dividends received in 2005 from Cerro Verde, we have not decided whether and to what extent we might repatriate foreign earnings or the related income tax effect of such repatriation. Our analysis indicates that the additional utilization of the provision discussed above would have minimal impact on the Company’s taxes. We expect to finalize our assessment by the end of the 2005 fourth quarter, at which time any tax impact would be recognized.

     On August 15, 2005, our Series A Stock automatically converted, at the rate of 2.083, into 4.2 million shares of Common Stock. The conversion rate was based on the average closing market price for the 20 consecutive trading days ending with the third trading day immediately preceding the conversion date. Each share of Series A Stock was non-voting and entitled to an annual dividend of $6.75, paid quarterly.

52

     During the 2005 third quarter, the Company finalized a year-long process of identifying and prioritizing opportunities to accelerate certain demolition, environmental reserve and asset retirement obligation (ARO) projects. The increased spending was prioritized based on projects where we have regulatory flexibility to remediate at a faster pace, structures that can be readily demolished, reclamation of visibly impacted areas, and projects in Arizona and New Mexico where we have substantial long-term closure obligations (Accelerated Projects). For the years 2001 to 2003, environmental reserve and ARO payments averaged approximately $28 million per year and in 2004, were approximately $101 million. The spending in 2004 was substantially higher than prior periods primarily as a result of a large settlement at our Yonkers, New York, site and work conducted to satisfy permit modifications related to our Tyrone mine in New Mexico. Our current plan is to increase spending, including capital, on Accelerated Projects to approximately $100 million to $150 million for 2005 and approximately $150 million per year for 2006 and 2007.

Other

     In the 2005 fourth quarter, we will complete our annual update to our company-wide business plans that includes updating our mine plans and associated ore reserve estimates, and our Specialty Chemicals and Wire and Cable business plans. The mine plans are based upon management’s estimates including long-term copper and molybdenum prices reflective of recent historic average copper and molybdenum price cycles. Specialty Chemicals and Wire and Cable business plans are based on management’s analysis and estimates of their respective market dynamics. Upon completion of our business plans in the fourth quarter, we will evaluate any significant changes in our mines and businesses and conduct impairment analyses, if appropriate.

Diesel Fuel and Natural Gas Price Protection Programs

     We purchase significant quantities of diesel fuel and natural gas to operate our facilities as inputs to the manufacturing process, electricity generation and copper refining.

     To reduce the Company’s significant exposure to rapid price increases in these energy products, the Company enters into energy price protection programs for our North American and Chilean operations. These programs serve as insurance to mitigate the impact of rapid energy price increases and the substantial impact they may have on our production cash costs. Our diesel fuel and natural gas price protection programs consist of purchasing a combination of diesel fuel and natural gas call option contracts and fixed-price swaps. The call option contracts give the holder the right, but not the obligation, to purchase a specific commodity at a pre-determined price, or “strike price.” Call options allow the Company to cap the commodity purchase cost at the strike price of the option while allowing the Company the ability to purchase the commodity at a lower cost when market prices are lower than the strike price. Fixed-price swaps allow us to establish a fixed commodity purchase price for delivery during a specific hedge period.

     At September 30, 2005, our diesel fuel price protection program had outstanding diesel fuel option contracts in place to hedge 13.5 million gallons of diesel fuel through December 2005. As of September 30, 2004, our diesel fuel price protection program had 13.9 million gallons of diesel fuel hedged. Gains and losses on these hedge transactions were substantially offset by a similar amount of loss or gain on the underlying diesel fuel purchases.

     As of September 30, 2005, our natural gas price protection program had outstanding natural gas option contracts in place to hedge 1.8 million decatherms of natural gas through December 2005. As of September 30, 2004, our natural gas price protection program had outstanding natural gas option contracts in place to hedge 1.9 million decatherms of natural gas. Gains on these hedge transactions were substantially offset by a similar amount of loss or gain on the underlying purchases.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

     There have been no material changes in the Company’s market risk during the first nine months of 2005. For additional information on market risk, refer to pages 41 through 43 and 78 through 83 of our report on Form 10-K for the year ended December 31, 2004.

Item 4. Controls and Procedures

     The Company maintains a system of disclosure controls and procedures that is designed to ensure information required to be disclosed by the Company is accumulated and communicated to management, including our chief executive officer and chief financial officer, in a timely manner.

     An evaluation of the effectiveness of this system of disclosure controls and procedures was performed under the supervision and with the participation of the Company’s management, including the Company’s chief executive officer and chief financial officer, as of the end of the period covered by this report. Based upon this evaluation, the Company’s management, including the Company’s chief executive officer and chief financial officer, concluded that the current system of controls and procedures is effective.

Changes in Internal Control Over Financial Reporting

     The Company’s management, including the Company’s chief executive officer and chief financial officer, has evaluated the Company’s internal control over financial reporting to determine whether any changes occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, there has been no such change in the Company’s internal control over financial reporting that occurred during the first nine months of 2005.

Part II. Other Information

Item 1. Legal Proceedings

     I. Reference is made to paragraph I of Part II, Item 1, Legal Proceedings, of the Company’s Form 10-Q for the quarter ended June 30, 2005.

     The Company submitted its written response to the NOV during a meeting with ADEQ on August 22, 2005. By letter dated September 9, 2005, ADEQ closed the NOV based on a determination that the Company had met the “documenting compliance” provisions of the NOV.

53

     II. Reference is made to paragraph II of Part II, Item 1, Legal Proceedings, of the Company’s Form 10-Q for the quarter ended June 30, 2005.

     On June 15, 2005, the New Mexico Court of Appeals overturned WQCC’s dismissal of a third party’s appeal of Chino’s closure permit. The New Mexico Supreme Court has declined to review the Court of Appeals decision. Under the decision, Chino’s closure permit is expected to be remanded to the WQCC for a hearing.

     III. Reference is made to paragraph XI of Part 1, Item 3, Legal Proceedings, of the Company’s Form 10-K for the year ended December 31, 2004, paragraph III of Part II, Item 1, Legal Proceedings, of the Company’s Form 10-Q for the quarter ended March 31, 2005 and to paragraph VII of Part II, Item 1, Legal Proceedings, of the Company’s Form 10-Q for the quarter ended June 30, 2005.

     A separate action entitled Carlisle Companies Incorporated, et al. v. Cabot Corporation, et al., has been filed against Columbian and other defendants on behalf of a group of affiliated companies that opted out of the federal class action. This action, which asserts similar claims as the class action, was filed in the Northern District of New York on July 28, 2005, but has been transferred to the District of Massachusetts, where the class action is pending. The time to respond to the complaint has not expired.

     The New Jersey Supreme Court has denied a request by the plaintiffs in the New Jersey action to certify an appeal of the order dismissing that action.

     IV. Reference is made to paragraph XII of Part 1, Item 3, Legal Proceedings, of the Company’s Form 10-K for the year ended December 31, 2004.

     Western Nuclear, Inc. (WNI), along with two other potentially responsible parties, executed a Consent Decree with the U.S. government to resolve its liability for conditions at the White King/Lucky Lass Superfund Site located near Lakeview, Oregon. Pursuant to the Consent Decree, the potentially responsible parties are required to perform the remedial design and remedial action work at the Site. The remedial action includes consolidation of waste rock piles and capping the piles with clean fill material. In return, the U.S. government is providing the potentially responsible parties with a covenant not to sue and contribution protection from all claims for liability for response costs. It is anticipated that the Consent Decree will be entered by the District Court of Oregon following a thirty-day (30) public comment period. Separately, WNI executed a settlement agreement with one potentially responsible party, resolving that party’s claims against WNI for past and future response costs.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Issuer Purchases of Equity Securities

     The following table sets forth information with respect to shares of common stock of the Company purchased by the Company during the three months ended September 30, 2005:

					(c) Total Number of		(d) Maximum Number (or
					Shares (or Units)		Approximate Dollar Value)
	(a) Total Number		(b) Average Price		Purchased as Part of		of Shares (or Units) That May
	of Shares (or Units)		Paid Per		Publicly Announced		Yet Be Purchased Under
Period	Purchased*		Share (or Unit)		Plans or Programs		the Plans or Programs
July 1-31, 2005		7,621	$	93.63		—		—
August 1-31, 2005		575		107.58		—		—
September 1-30, 2005		5,141		117.82		—		—
Total		13,337	$	103.56		—		—

* The shares shown have been repurchased under the Company’s applicable restricted stock plans (Plans) and its non-qualified supplemental savings plan (SSP). Through the Plans, certain employees may elect to satisfy their tax obligations on restricted stock awards by having the Company withhold a portion of their shares of restricted stock. Additionally, the Company repurchases shares in the SSP as a result of changes in investment elections by plan participants.

54

Item 5. Other Information

(b) The purpose of this disclosure is to clarify the proper dates under which shareholder proposals will be considered for the Company’s annual meeting of shareholders to be held May 26, 2006. The Company will review for inclusion in next year’s proxy statement shareholder proposals received by December 15, 2005. Proposals should be sent to the Assistant General Counsel and Secretary, Phelps Dodge Corporation, One North Central Avenue, Phoenix, Arizona 85004. Shareholder proposals not included in next year’s proxy statement may be brought before the May 26, 2006 annual meeting of shareholders by a shareholder of the Company who is entitled to vote at the meeting, who has given a written notice to the Assistant General Counsel and Secretary of the Company containing certain information specified in the By-Laws and who was a shareholder of record at the time such notice was given. Such notice must be delivered to or mailed and received at the One North Central Avenue address noted above no earlier than the close of business on January 26, 2006, and no later than the close of business on February 25, 2006 (or, for shareholder proposals nominating directors, no earlier than the close of business on January 25, 2006, and no later than the close of business on February 24, 2006), except that if the date of the 2006 annual meeting of shareholders is changed, and the meeting is held before April 26, 2006, or after July 26, 2006, such notice must be delivered or mailed and received at the One North Central Avenue address specified above no earlier than the close of business 120 days prior to the new date of such annual meeting and no later than the close of business on the later of (i) the 90th day prior to the new date of such meeting, and (ii) the 10th day following the day on which a public announcement of the new date of such annual meeting is first made.

Item 6. Exhibits

     Exhibits required to be filed by the Company are listed in the Index to Exhibits.

     Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PHELPS DODGE CORPORATION

(Corporation or Registrant)

Date: October 27, 2005	By:	/s/ Denise R. Danner Denise R. Danner
		Vice President and Controller
		(Principal Accounting Officer)

Index to Exhibits

10.1	Master Participation Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and Calyon New York Branch (as Administrative Agent).
10.2	Completion Guarantee, dated as of September 30, 2005, among Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Compañia de Minas Buenaventura S.A.A., Phelps Dodge Corporation, Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and Calyon New York Branch (as Administrative Agent).
10.3	Master Security Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Calyon New York Branch (as Administrative Agent), Citibank, N.A. and Citibank del Perú S.A.
10.4	Transfer Restrictions Agreement, dated as of September 30, 2005, among SMM Cerro Verde Netherlands, B.V., Compañia de Minas Buenaventura S.A.A., Cyprus Climax Metals Company, Sumitomo Metal Mining Co., Ltd., Sumitomo Corporation, Phelps Dodge Corporation, Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., and Calyon New York Branch (as Administrative Agent).
10.5	JBIC Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde S.A.A., Japan Bank for International Cooperation, and Sumitomo Mitsui Banking Corporation (as JBIC Agent).
10.6	KfW Loan Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro Verde S.A.A. and KfW.
10.7	Commercial Banks Loan Agreement, dated as of September 30, 2005, among Sociedad Minera Cerro Verde S.A.A., Calyon New York Branch (as Administrative Agent), Calyon New York Branch, Mizuho Corporate Bank, Ltd., The Bank of Nova Scotia, and The Royal Bank of Scotland plc.
10.8	PD Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge Corporation and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to the Operator’s Agreement dated June 1, 2005, between Sociedad Minera Cerro Verde S.A.A. and Minera Phelps Dodge del Perú S.A.C.).

55

10.9	PD Parent Company Guarantee, dated as of September 30, 2005, between Phelps Dodge Corporation and Sociedad Minera Cerro Verde S.A.A. (this guarantee is with respect to (i) the Concentrate Sales Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro Verde S.A.A. and Phelps Dodge Sales Company Incorporated, and (ii) the Cathodes Sales Agreement, dated as of September 30, 2005, between Sociedad Minera Cerro Verde S.A.A. and Phelps Dodge Sales Company Incorporated).
11	Computation of per share earnings.
12	Computation of ratios of total debt to total capitalization.
15	Letter from PricewaterhouseCoopers LLP with respect to unaudited interim financial information.
31	Certifications of J. Steven Whisler, Chairman and Chief Executive Officer of the Company, and Ramiro G. Peru, Executive Vice President and Chief Financial Officer of the Company, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.
32	Certifications of J. Steven Whisler, Chairman and Chief Executive Officer of the Company, and Ramiro G. Peru, Executive Vice President and Chief Financial Officer of the Company, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.1

                                                                  EXECUTION COPY

                                                                    Exhibit 10.1

================================================================================

                         MASTER PARTICIPATION AGREEMENT

                                      among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                  as Borrower,

                    JAPAN BANK FOR INTERNATIONAL COOPERATION,
                          as a Senior Facility Lender,

                      SUMITOMO MITSUI BANKING CORPORATION,
                 as a Lead JBIC Arranger and Global Coordinator,

                       THE BANK OF TOKYO-MITSUBISHI, LTD.,
                            as a Lead JBIC Arranger,

                                      KfW,
                          as a Senior Facility Lender,

                             CALYON NEW YORK BRANCH,
       as a Senior Facility Lender, Lead Arranger and Global Coordinator,

                         THE ROYAL BANK OF SCOTLAND PLC,
                 as a Senior Facility Lender and Lead Arranger,

                            THE BANK OF NOVA SCOTIA,
                 as a Senior Facility Lender and Lead Arranger,

                          MIZUHO CORPORATE BANK, LTD.,
                 as a Senior Facility Lender and Lead Arranger,

                                       and

                             CALYON NEW YORK BRANCH,
                             as Administrative Agent

                         Dated as of September 30, 2005

================================================================================



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I    DEFINITIONS AND INTERPRETATION..............................     4
   1.01         Definitions..............................................     4
   1.02         Interpretation...........................................     4

ARTICLE II   FINANCING PLAN..............................................     5
   2.01         Senior Facility Lenders' Commitment to Lend..............     5
   2.02         Issuance of the Peruvian Bonds...........................     5
   2.03         Termination or Reduction of Commitments..................     7
   2.04         Timing of Advances.......................................     8
   2.05         Base Advances Specific Disbursement Mechanics............     8
   2.06         Stand-By Advances Specific Disbursement Mechanics........    10
   2.07         Several Obligations......................................    10
   2.08         Promissory Notes.........................................    11
   2.09         Senior Facility Lender's Failure to Fund.................    12

ARTICLE III  COMMON LENDING ARRANGEMENTS.................................    13
   3.01         Repayment of the Advances................................    13
   3.02         Interest.................................................    13
   3.03         Senior Facility Loans Pari Passu.........................    14
   3.04         Pro Rata Payments........................................    14
   3.05         Voluntary Prepayment.....................................    14
   3.06         Mandatory Prepayment.....................................    15
   3.07         Partial Payments.........................................    17
   3.08         Application of Prepayments Other Than Prepayments in
                   Full..................................................    17
   3.09         Taxes....................................................    17
   3.10         Single Senior Lender Suspension or Termination...........    19
   3.10A.       Single Lender Acceleration...............................    20
   3.11         Funding Losses...........................................    21
   3.12         Illegality...............................................    22

ARTICLE IV   FEES........................................................    22
   4.01         Commitment Fee...........................................    22
   4.02         Other Fees...............................................    22

ARTICLE V    CONDITIONS PRECEDENT........................................    23
   5.01         Conditions Precedent to Initial Disbursements of Base
                   Advances..............................................    23



                                        i



                                                                          
   5.02         Conditions Precedent to Initial Disbursements of Stand-By
                   Advances and to Subsequent Advances...................    29
   5.03         Satisfaction of Conditions Precedent.....................    29

ARTICLE VI   REPRESENTATIONS AND WARRANTIES..............................    29
   6.01         Organization, Authority, Binding Effect..................    30
   6.02         Capitalization...........................................    30
   6.03         Compliance with Other Instruments and Laws...............    30
   6.04         Environmental Matters....................................    31
   6.05         Taxes....................................................    31
   6.06         Labor Matters............................................    32
   6.07         Legal Proceedings........................................    32
   6.08         Consents, etc............................................    32
   6.09         Financial Statements.....................................    33
   6.10         No Broker................................................    33
   6.11         Absence of Undisclosed Liabilities.......................    33
   6.12         Absence of Certain Changes and Events....................    33
   6.13         Mining and Beneficiation Concessions and Other Rights....    33
   6.14         Related Party Transactions and Commitments...............    34
   6.15         Project Information......................................    34
   6.16         Ranking..................................................    35
   6.17         No MPA Event of Default or MPA Default...................    35
   6.18         Copies of Documents......................................    35
   6.19         Property and Assets......................................    35
   6.20         No Immunity..............................................    35
   6.21         Stability Agreement......................................    35
   6.22         Description of the Sulfide Project.......................    35
   6.23         Water Rights, etc........................................    35
   6.24         Tax Liability............................................    36

ARTICLE VII  COVENANTS...................................................    36
   7.01         Maintenance of Existence.................................    36
   7.02         Books, Records and Accounts..............................    36
   7.03         Principal Place of Business..............................    36
   7.04         Use of Proceeds..........................................    36
   7.05         Information..............................................    37
   7.06         Confirmation of Progress of Construction.................    39
   7.07         Preservation of Assets...................................    39
   7.08         Mining Concessions.......................................    40
   7.09         Minimum Production.......................................    40
   7.10         Offtake Agreements.......................................    40
   7.11         Sale of Concentrate and Cathodes.........................    41




                                       ii



                                                                          
   7.12         Project Documents........................................    41
   7.13         Power Generation Facility................................    42
   7.14         Taxes....................................................    42
   7.15         Sulfide Project, Capital Expenditures....................    43
   7.16         Limitation on Debt.......................................    43
   7.17         Limitation on Liens......................................    44
   7.18         Drawdowns of Senior Loans................................    45
   7.19         Notice of MPA Defaults; Extraordinary Notices............    45
   7.20         Restricted Payments......................................    46
   7.21         Compliance with Law......................................    47
   7.22         Transactions with Affiliates.............................    47
   7.23         Environmental Compliance.................................    48
   7.24         Permitted Hedges.........................................    49
   7.25         Ordinary Course Transactions.............................    49
   7.26         Determination of Extraordinary Major Maintenance Reserve
                   Amount................................................    49
   7.27         Determination of Tax Contingency Reserve Amount..........    49
   7.28         Further Assurances.......................................    50
   7.29         No Modifications of By-Laws..............................    50
   7.30         Business.................................................    50
   7.31         Access...................................................    51
   7.32         Operation of Business....................................    51
   7.33         No Merger or Consolidation...............................    51
   7.34         No Subsidiaries; no Acquisitions.........................    51
   7.35         Construction of Project..................................    51
   7.36         Operator.................................................    51
   7.37         Limitation on Loans......................................    52
   7.38         Request for Completion Loans.............................    52
   7.39         Limitation on Share Issuance.............................    52
   7.40         Ethical Business Practices...............................    52

ARTICLE VIII INSURANCE...................................................    52
   8.01         Maintenance of Insurance.................................    52
   8.02         Insurance Consultant.....................................    52

ARTICLE IX   MPA EVENTS OF DEFAULT AND REMEDIES..........................    53
   9.01         MPA Events of Default....................................    53
   9.02         Declaration of MPA Event of Default......................    59
   9.03         Cessation of MPA Event of Default........................    60
   9.04         Abandonment..............................................    60

ARTICLE X    SENIOR FACILITY LENDERS ARRANGEMENTS........................    60
   10.01        Senior Facility Lenders Actions..........................    60




                                       iii



                                                                          
   10.02        Sharing of Information...................................    64
   10.03        General Consultation.....................................    64
   10.04        Sharing of Non-Pro Rata Payments.........................    65
   10.05        Termination of Senior Debt Commitments...................    66
   10.06        Global Coordinator.......................................    66

ARTICLE XI   POLITICAL EVENTS OF FORCE MAJEURE...........................    66
   11.01        Declaration of Event of Political Force Majeure..........    66
   11.02        Notices by Administrative Agent..........................    66
   11.03        Arbitration..............................................    66

ARTICLE XII  MISCELLANEOUS...............................................    67
   12.01        Service Providers........................................    67
   12.02        Accession................................................    68
   12.03        Effectiveness............................................    68
   12.04        Termination..............................................    68
   12.05        Stability Agreement......................................    68
   12.06        Currency Equivalents.....................................    68
   12.07        Governing Law............................................    69
   12.08        Severability.............................................    69
   12.09        Entire Agreement.........................................    69
   12.10        Confidentiality..........................................    69
   12.11        Notices..................................................    70
   12.12        Benefits of Agreement....................................    72
   12.13        Successors and Assigns...................................    72
   12.14        Remedies.................................................    73
   12.15        Execution in Counterparts................................    74
   12.16        Consent to Jurisdiction..................................    74
   12.17        Arbitration..............................................    75
   12.18        No Trial by Jury.........................................    76
   12.19        Amendments and Waivers...................................    76
   12.20        Senior Facility Lenders' Credit Decisions................    77
   12.21        Payment of Expenses......................................    77
   12.22        Conflicts................................................    79
   12.23        No Partnership...........................................    79
   12.24        No Immunity..............................................    79
   12.25        Reinstatement............................................    79



                
Schedule A         Committed Amounts
Schedule B         Repayment Schedule
Schedule C         Drawdown Schedule




                                       iv



                
Schedule D         Description of the Sulfide Project
Schedule E         Tax Certification
Schedule F         Tax Matters
Schedule 6.02      Borrower Capitalization
Schedule 6.03(c)   Compliance with Other Instruments and Laws
Schedule 6.03(d)   Core Peruvian Governmental Approvals
Schedule 6.04      Environmental Matters
Schedule 6.05      Taxes
Schedule 6.06      Labor Matters
Schedule 6.07      Legal Proceedings
Schedule 6.08      Consents
Schedule 6.09      Financial Statements
Schedule 6.12      Absence of Certain Changes and Events
Schedule 6.13      Title to Assets, Mining and Beneficiation Concessions and
                   Other Rights
Schedule 6.14      Related Party Transactions and Commitments
Schedule 6.24      Tax Liability

Exhibit A          JBIC Loan Agreement
Exhibit B          KfW Loan Agreement
Exhibit C          Commercial Banks Loan Agreement
Exhibit D          Form of Peruvian Bonds Indenture
Exhibit E          Form of Debt Service Coverage Ratio Certificate
Exhibit F          Form of Transferee Accession Agreement
Exhibit G-1        Form of New Party Accession Agreement (Replacement Lender)
Exhibit G-2        Form of New Party Accession Agreement (Bridge Loan Provider)
Exhibit H-1        Form of Consent to Assignment (Operator's Agreement)
Exhibit H-2        Form of Consent to Assignment (Engineering Agreement
                   and Construction Agreement)
Exhibit H-3        Form of Consent to Assignment (Shareholders Agreement)
Exhibit I          Form of Consent of Assignment (Peruvian law agreement)
Exhibit J          Form of Notice of Conditional Assignment

Appendix I-1       Form of Opinion of Rodrigo, Elias & Medrano, Abogados
                   (Borrower Opinion on Share Pledge on behalf of Cyprus and
                   Sumitomo Participants)
Appendix I-2       Form of Opinion of Debevoise & Plimpton LLP on behalf of PDC,
                   the PD Buyer, the PD Participant, Borrower, Operator,
                   PD Buyer and BVN
Appendix I-3       Form of Opinion of Estudio Luis Echecopar Garcia, Special
                   Peruvian Counsel to the Senior Facility Lenders
Appendix I-4       Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP




                                        v



                
Appendix I-5       Form of Opinion of Emmet, Marvin & Martin, LLP, Special New
                   York Counsel to the Trustee
Appendix I-6       Form of Opinion of Rodrigo, Elias & Medrano, Abogados
                   (Operator Opinion)
Appendix I-7       Form of Opinion of Rodrigo, Elias & Medrano, Abogados
                   (ElectroPeru S.A. Opinion)
Appendix I-8       Form of Opinion of Rodrigo, Elias & Medrano, Abogados
                   (EGASA Opinion)
Appendix I-9       Form of Opinion of Sullivan & Cromwell LLP on behalf of SMM,
                   SC, SGM and the Sumitomo Participant (Financing Documents)
Appendix I-10      Form of Opinion of Sullivan & Cromwell LLP on behalf of SMM
                   (Offtake Agreements)
Appendix I-11      Form of Opinion of Sakai & Nimura on behalf of SMM
                   (Offtake Agreements)
Appendix I-12      Form of Opinion of Sakai & Nimura on behalf of SMM, SC and
                   SGM (Financing Documents)
Appendix I-13      Form of Opinion of Allen & Overy LLP on behalf of the
                   Sumitomo Participant
Appendix I-14      Form of Opinion of Estudio Aurelio Garcia Sayan, Abogados on
                   behalf of BVN
Appendix II        Insurance
Appendix III       Form of Annual Budget




                                       vi



                         MASTER PARTICIPATION AGREEMENT

     MASTER PARTICIPATION AGREEMENT, dated as of September 30, 2005 (the
"Agreement" or "MPA") is made by and among:

     SOCIEDAD MINERA CERRO VERDE S.A.A., a sociedad anonima abierta listed on
the Lima Stock Exchange and organized under the laws of Peru (the "Borrower");

     JAPAN BANK FOR INTERNATIONAL COOPERATION, a Japanese government financial
institution organized under the laws of Japan ("JBIC"), in its capacity as a
Senior Facility Lender;

     SUMITOMO MITSUI BANKING CORPORATION, a stock corporation organized under
the laws of Japan, as lead JBIC arranger and Global Coordinator ("SMBC", and, in
its capacity as Global Coordinator, the "Global Coordinator");

     THE BANK OF TOKYO-MITSUBISHI, LTD., a banking institution organized under
the laws of Japan, as lead JBIC arranger ("BOT-M" and together with SMBC, in
their capacity as lead JBIC arrangers, the "Lead JBIC Arrangers");

     KfW, a public corporation formed under the laws of the Federal Republic of
Germany ("KfW"), in its capacity as a Senior Facility Lender;

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic ("Calyon"), in its
capacity as a Senior Facility Lender, Lead Arranger and Global Coordinator;

     THE ROYAL BANK OF SCOTLAND PLC, a public limited company incorporated under
the laws of Scotland ("RBS"), in its capacity as a Senior Facility Lender and
Lead Arranger;

     THE BANK OF NOVA SCOTIA, a Canadian chartered bank, organized under the
laws of Canada ("Scotia Capital"), in its capacity as a Senior Facility Lender
and Lead Arranger;

     MIZUHO CORPORATE BANK, LTD., a banking institution organized under the laws
of Japan ("Mizuho"), in its capacity as a Senior Facility Lender and Lead
Arranger; and

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic, as Administrative
Agent for the Senior Lenders (in such capacity, the "Administrative Agent").



                                    RECITALS

     A. The Borrower owns the Cerro Verde copper mine, including a copper
leaching and solution extraction/electrowinning (SX/EW) operation, located in
the District of Uchumayo and Yarabamba, Province of Arequipa, Republic of Peru
(the "Current Operations");

     B. The board of directors of the Borrower has approved the development of a
primary sulfide portion of the ore body beneath the oxide portion of the ore
body currently in production (the "Sulfide Project");

     C. In connection with the Sulfide Project, Sumitomo Metal Mining Co., Ltd.,
a Japanese corporation ("SMM"), Sumitomo Corporation, a Japanese corporation
("SC"), Summit Global Management II B.V., formerly known as Summit Global
Management B.V., a Dutch corporation ("SGM"), Phelps Dodge Corporation, a New
York corporation ("PDC"), Cyprus Amax Minerals Company, a Delaware corporation
("ACMC"), Cyprus Metals Company, a Delaware corporation ("CMC"), Cyprus Climax
Metals Company, a Delaware corporation ("CCMC"), Compania de Minas Buenaventura
S.A.A., a sociedad anonima abierta organized under the laws of the Republic of
Peru ("BVN"), and the Borrower have entered into a Participation Agreement,
dated as of March 16, 2005 (as amended by the Joinder to the Participation
Agreement, among SMM Cerro Verde Netherlands B.V., a Dutch corporation (the
"Sumitomo Participant" and collectively with SMM, SC, and SGM, the "Sumitomo
Parties"), SMM, SC, SGM, BVN, PDC, CAMC, CMC, CCMC and the Borrower, dated as of
May 5, 2005, and as further amended by the Amendment to the Participation
Agreement, among the Sumitomo Participant, SMM, SC, SGM, BVN, PDC, CAMC, CMC,
CCMC and the Borrower, dated as of May 24, 2005, the "Participation Agreement"),
pursuant to which the Sumitomo Participant and BVN acquired shares of Common
Stock of the Borrower on June 1, 2005;

     D. PDC, CCMC, the Sumitomo Parties, BVN and the Borrower have entered into
a Shareholders Agreement, dated as of June 1, 2005 (the "Shareholders
Agreement"), which sets forth certain matters relating to the governance and
ownership of the shares of the Borrower;

     E. The Borrower and SMM have entered into a Concentrate Sales Agreement
dated June 1, 2005, as amended through the date hereof, pursuant to which the
Borrower has agreed to sell and SMM has agreed to purchase 50% of the Borrower's
annual projected copper Concentrate production up to December 31, 2016 pursuant
to the terms set forth therein (the "SMM Concentrate Sales Agreement");

     F. The Borrower and Phelps Dodge Sales Company Incorporated ("PD Sales
Company") have entered into a Concentrate Sales Agreement dated as of the date
hereof, pursuant to which the Borrower has agreed to sell, and PD Sales Company
has agreed to purchase, 20% (which percentage shall in certain circumstances be
increased) of the


                                        2



Borrower's annual projected copper Concentrate production up to December 31,
2015 (the "PD Concentrate Sales Agreement," and together with the SMM
Concentrate Sales Agreement, the "Concentrate Sales Agreements");

     G. The Borrower and PD Sales Company have entered into a Cathodes Sales
Agreement dated as of the date hereof, pursuant to which the Borrower has agreed
to sell, and PD Sales Company has agreed to purchase 70% (which percentage shall
in certain circumstances be increased) of the Borrower's annual actual
production of Cathodes up to December 31, 2015 (the "PD Cathodes Sales
Agreement"), and PDC has entered into a Parent Company Guarantee for the benefit
of the Borrower, pursuant to which PDC has agreed to guarantee the obligations
of PD Sales Company under the PD Concentrate Sales Agreement and PD Cathodes
Sales Agreement (the "PDC Guarantee");

     H. The Borrower and Minera Phelps Dodge Del Peru S.A.C., a Peruvian
sociedad anonima cerrada (the "Operator"), have entered into an Operator's
Agreement, dated as of June 1, 2005 (the "Operator's Agreement"), pursuant to
which the Operator shall provide to the Borrower certain managerial, design,
engineering, development, construction and operation services;

     I. The Borrower proposes to incur senior loans for the purpose of financing
the Sulfide Project;

     J. The Borrower proposes to enter into a Master Security Agreement, that
sets forth certain provisions regarding the management of the cash standing to
the credit of certain accounts identified therein and certain arrangements
common to the Senior Lenders with respect to the exercise of remedies against
the Borrower; and

     K. To induce the Senior Facility Lenders to enter into this Agreement, the
Borrower has agreed to grant to the Onshore Collateral Agent and the Offshore
Collateral Agent, for the benefit of the Senior Lenders, a first priority
security interest in the collateral described in the Security Documents;

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower, each of the Lead JBIC Arrangers,
each of the Senior Facility Lenders and the Administrative Agent (each an "MPA
Party" and collectively, the "MPA Parties", which term shall include any
Replacement Lender or Bridge Loan Provider after such Replacement Lender or
Bridge Loan Provider has become a party to this Agreement in accordance with
Section 12.02) hereby agree as follows:


                                        3



                                   ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to the Master Security Agreement among the
Borrower, the Senior Lenders, the Lead JBIC Arrangers, the Global Coordinators,
the Lead Arrangers, the Administrative Agent, the Trustee, the Offshore
Collateral Agent and the Onshore Collateral Agent dated as of the date hereof.

     1.02 Interpretation. In this Agreement and in the Appendices hereto, except
to the extent that the context otherwise requires:

          (a) the Table of Contents, Articles and Section headings are for
     convenience of reference only and shall not affect the interpretation of
     this Agreement;

          (b) unless otherwise specified, references to Articles, Sections,
     clauses, Exhibits, Schedules and Appendices are references to Articles,
     Sections, clauses, Exhibits and Schedules of, and Appendices to, this
     Agreement;

          (c) references to any document or agreement, including this Agreement,
     shall be deemed to include references to such document or agreement as
     amended, supplemented or replaced and in effect from time to time in
     accordance with its terms and subject to compliance with the requirements
     set forth herein and therein;

          (d) references to any party to this Agreement or any other document or
     agreement or to any other Person shall include its successors and permitted
     assigns;

          (e) when used in this Agreement, the words "including", "includes" and
     "include" shall be deemed to be followed in each instance by the words
     "without limitation";

          (f) when used in this Agreement, the words "herein", "hereby",
     "hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and
     words of similar import, shall refer to this Agreement in its entirety and
     not to any particular section, subsection, paragraph, sub-paragraph, clause
     or other subdivision, exhibit, schedule or appendix of this Agreement; and


                                        4



          (g) when used herein, the singular shall include the plural, the
     plural shall include the singular and the use of any gender shall include
     all genders, unless the context requires otherwise.

                                   ARTICLE II

                                 FINANCING PLAN

     2.01 Senior Facility Lenders' Commitment to Lend.

     (a) On the date hereof, JBIC shall enter into the JBIC Loan Agreement with
the Borrower (the "JBIC Loan Agreement"), KfW shall enter into the KfW Loan
Agreement with the Borrower (the "KfW Loan Agreement") and the Commercial Banks
shall enter into the Commercial Banks Loan Agreement with the Borrower (the
"Commercial Banks Loan Agreement"), in the forms attached respectively as
Exhibits A, B and C (each, a "Senior Facility Loan Agreement"). Each Senior
Facility Loan Agreement shall reflect, among other terms, the commitment of each
Senior Facility Lender that is a party thereto to make from time to time
advances (each an "Advance") to the Borrower in an amount up to its Aggregate
Committed Amount and shall reflect the Borrower's agreement to repay such
Advances with interest.

     (b) The obligations of each Senior Facility Lender and of the Borrower with
respect to the making and the repayment of such Advances shall be as set forth
in the Senior Facility Loan Agreement to which such Senior Facility Lender is a
party and in this Agreement.

     2.02 Issuance of the Peruvian Bonds.

     (a) The Senior Facility Lenders acknowledge and agree that after the date
hereof, the Borrower shall have the right to issue bonds (the "Peruvian Bonds")
through a program (the "Peruvian Bonds Program") performed under (i) an
indenture substantially in the form attached as Exhibit D (or with such changes
(x) as may be requested by CONASEV during its review of the Peruvian Bonds
Program so long as such changes (i) are not material changes to the financial
terms of the Peruvian Bonds and (ii) are not changes that materially improve the
rights of the Peruvian Bondholders or impose materially greater obligations on
the Borrower for the benefit of the Peruvian Bondholders except if Borrower
gives equivalent rights to the Senior Facility Lenders or (y) that are notified
in writing by the Borrower to the Administrative Agent so long as the
Administrative Agent acting upon instructions from the Majority Facility Lenders
does not object in writing to such form within 15 Business Days of receipt of
such notice) (the "Peruvian Bonds Indenture") and (ii) supplementary indentures
to be entered into in connection with each specific issue of Peruvian Bonds
under the Peruvian Bonds Program. The Borrower may issue the Peruvian Bonds with
such rate of interest as may be determined by the Borrower in its sole
discretion and with an


                                        5



aggregate principal amount which, shall not exceed (a) the sum of (i) U.S.$100
million and (ii) the amount of accrued and unpaid interest on the Stand-By
Advances of the Commercial Banks to be prepaid with the proceeds of such
issuance, if any, or (b) such greater amount as may be notified in writing by
the Borrower to the Administrative Agent, so long as the Administrative Agent,
acting upon instructions from each Senior Facility Lender, does not object in
writing to such amount within 15 Business Days of receipt of such notice (the
greater of (a) and (b), the "Peruvian Bonds Cap"), provided that (x) principal
and interest shall be paid on the Peruvian Bonds on the same dates as principal
and interest shall be paid on the Senior Facility Loans, (y) the Peruvian Bonds
shall mature no earlier than the Final Maturity Date and (if amortizing) shall
amortize at a rate no faster than the Senior Facility Lenders and (z) the
interest rate payable on the Peruvian Bonds shall not exceed, in the case of a
floating rate issuance, LIBOR plus 3% p.a., or in the case of a fixed rate
issuance, a fixed rate equal to LIBOR plus 3% p.a. at the time of issuance. The
Borrower shall give the Administrative Agent no less than five Business Days'
advance written notice of the anticipated date of the closing of the issuance of
the Peruvian Bonds (each, a "Bond Issuance Notice").

     (b) On the date of the closing of the first issuance of Peruvian Bonds by
the Borrower (the "Bonds Closing Date"):

          (i) the Common Representative shall become a party to the Completion
     Guarantee by entering into, in its capacity as Common Representative, a New
     Party Accession Agreement (substantially in the form of Exhibit G) and
     thereupon the Peruvian Bondholders, acting through the Common
     Representative, shall collectively have all of the rights and obligations
     of a Senior Lender; and

          (ii) the Common Representative shall become a party to the Master
     Security Agreement by entering into, in its capacity as Common
     Representative, a New Party Accession Agreement and thereupon the Common
     Representative and the Peruvian Bondholders shall have all the rights and
     obligations of, respectively, the Common Representative and the Peruvian
     Bondholders under the Master Security Agreement.

     (c) On each date of issuance of Peruvian Bonds by the Borrower under the
Peruvian Bonds Program (including the Bonds Closing Date):

          (i) the Stand-By Committed Amount of the Commercial Banks will be
     automatically reduced (but not below zero) by an amount equal to the
     difference between (x) the principal amount of Peruvian Bonds issued on
     such date (with the aggregate reduction to be allocated to each Commercial
     Bank's Stand-By Committed Amount based on their respective Stand-By
     Committed Amounts) and (y) the proceeds of such issuance used to pay
     accrued and unpaid


                                        6



     interest on the Stand-By Advances of the Commercial Banks prepaid with the
     proceeds of such issuance, if any;

          (ii) the Borrower shall instruct the placement agent to, and the
     placement agent shall, deposit to the Proceeds Account the proceeds of the
     issuance of the Peruvian Bonds on the date of issuance or immediately
     thereafter; and

          (iii) the Borrower and the Common Representative shall take all other
     actions required to be taken on such date pursuant to the documents related
     to the issuance of such Peruvian Bonds.

     (d) Subject to the provisions of this Section 2.02, the Borrower shall have
the right to issue the Peruvian Bonds as and when the Borrower deems
appropriate.

     2.03 Termination or Reduction of Commitments.

     (a) The Borrower shall have the right, upon not less than 15 Business Days'
notice to the Administrative Agent, (i) to terminate entirely all of the
Commitments or (ii) from time to time to reduce the Aggregate Committed Amount
of each of the Senior Facility Lenders, so long as the Completion Guarantee
remains in full force and effect and there is no material breach thereunder
which has occurred and is Continuing. Any such reduction shall (x) reduce
permanently the Aggregate Committed Amount of each of the Senior Facility
Lenders and (y) be required to be made pro rata among the Senior Facility
Lenders in accordance with their respective Commitment Percentages. The Borrower
shall have the right, at its discretion, to allocate the reduction to the
Aggregate Committed Amount of the Commercial Banks between their respective Base
Committed Amounts and Stand-By Committed Amounts, provided that the same
allocation shall be made for each Commercial Bank. Upon any such reduction in
the Aggregate Committed Amount of the Senior Facility Lenders, the Borrower
shall promptly provide to the Senior Facility Lenders a funding plan which shall
show in the Borrower's good faith judgment that it has sufficient resources to
pay for the remainder of construction costs for the Sulfide Project, provided,
that such funding plan shall be provided for informational purposes only and
shall not bind, constitute a condition precedent, or otherwise limit the
Borrower's discretion to terminate the Commitments or reduce the Aggregate
Committed Amount of the Senior Facility Lenders in any way.

     (b) On the Availability Period End Date, the Commitment of the Senior
Facility Lenders shall terminate and thereafter no Senior Facility Lender shall
be required to make any further Advances.


                                        7



     2.04 Timing of Advances.

     (a) Subject to and upon the terms and conditions set forth herein and in
each Senior Facility Loan Agreement, the Borrower shall have the right to
request Advances from the Senior Facility Lenders in accordance with the
Drawdown Schedule attached as Schedule C, provided that the Borrower may change
actual timing of utilization without consent from the Senior Facility Lenders so
long as in each Notice of Borrowing the Borrower certifies that it expects to
use the proceeds from the disbursements to fund Project Costs expected to become
due and payable within the next 90 days and provided further that:

          (i) the Borrower shall first request Advances (a "Base Advance") from
     the Senior Facility Lenders on a Pro Rata Basis up to their respective Base
     Committed Amounts; and

          (ii) after the Senior Facility Lenders have made Base Advances in an
     amount equal to their respective Base Committed Amount, the Borrower may
     request any subsequent Advances (a "Stand-By Advance") from the Commercial
     Banks up to their respective Stand-By Committed Amount (as may be reduced
     in accordance with Section 2.03(a)).

     (b) The failure of one or more Senior Facility Lenders to disburse the
proceeds of a Senior Facility Loan on a Disbursement Date upon receipt of a
Notice of Borrowing properly given and for which no Senior Facility Lender
Negative CP Notice exists and has not been withdrawn pursuant to a Senior
Facility Lender Withdrawal Notice shall not excuse any other Senior Facility
Lenders from its own obligation to disburse the proceeds of a Senior Facility
Loan on such Disbursement Date.

     2.05 Base Advances Specific Disbursement Mechanics.

     (a) Each request for a Base Advance shall be made concurrently under each
of the Senior Facility Loan Agreements and on a Pro Rata Basis with respect to
each of the Senior Facility Lenders by delivery by the Borrower of concurrent
Notices of Borrowing (i) in the case of an Advance under the JBIC Loan
Agreement, to JBIC and the JBIC Agent, with a copy thereof to the Administrative
Agent, (ii) in the case of an Advance under the KfW Loan Agreement, to KfW, with
a copy thereof to the Administrative Agent and (iii) in the case of an Advance
under the Commercial Banks Loan Agreement, to the Administrative Agent. The
Notices of Borrowing delivered as contemplated above shall direct that the
proceeds of each Base Advance be deposited into the Onshore Dollars Account, in
accordance with the Master Security Agreement. Each such Notice of Borrowing
shall be delivered at least fifteen (15) Business Days before the proposed
Disbursement Date, which Disbursement Date shall be a Business Day; provided
that, except in the event that any Notice of Borrowing delivered in any calendar
month is deemed cancelled pursuant to Section 2.05(b), the Borrower shall not


                                        8



deliver more than one Notice of Borrowing in respect of each Senior Facility
Loan in any calendar month.

     (b) In connection with the delivery of any Notice of Borrowing with respect
to a Base Advance, if JBIC, KfW or any Commercial Bank determines that any
condition precedent to such Senior Facility Lender's obligation to make an
Advance set forth in Section 5.01 or 5.02, as the case may be, will not be
satisfied or waived, the JBIC Agent on behalf of JBIC or the Administrative
Agent on behalf of KfW and the Commercial Banks (as the case may be) shall
notify the Borrower and each other Senior Facility Lender no later than six (6)
Business Days prior to the Disbursement Date requested by the Borrower in such
Notice of Borrowing of such determination in a notice identifying with
particularity the condition(s) not satisfied or waived (a "Senior Facility
Lender Negative CP Notice"), in which case all such Notices of Borrowing shall
be deemed canceled for all purposes of this Agreement. The failure of the JBIC
Agent on behalf of JBIC or the Administrative Agent on behalf of KfW and the
Commercial Banks to provide such notice shall not waive any right of such Senior
Facility Lender not to make an Advance on the Disbursement Date requested by the
Borrower if any such condition precedent has not been satisfied or waived as of
such date. Notwithstanding anything else herein, neither the JBIC Agent on
behalf of JBIC nor the Administrative Agent on behalf of any Senior Facility
Lender shall have the right to deliver a Senior Facility Lender Negative CP
Notice with respect to a Base Advance (other than the initial Base Advance), (i)
in the case of a failure to satisfy any conditions precedent set forth in
Section 5.01(q) subclauses (ii) and (iii), Section 5.01(r) and Section 5.01(s),
unless the failure to satisfy such condition precedent has been approved by
Senior Facility Lenders pursuant to a Supermajority Facility Vote and (ii) in
the case of a failure to satisfy any other conditions precedent to subsequent
Base Advance, if such condition has been waived by the Administrative Agent
acting pursuant to instructions from each Senior Facility Lender.

     (c) Upon delivery of a Senior Facility Lender Negative CP Notice, the
Senior Facility Lenders shall have no obligation to make the Advance requested
in the applicable Notice of Borrowing; provided, however, that the Senior
Facility Lenders' obligation to make the requested Advance shall be reinstated
if the JBIC Agent (in the case of a Senior Facility Lender Negative CP Notice
delivered by the JBIC Agent) or the Administrative Agent (in the case of a
Senior Facility Lender Negative CP Notice delivered by the Administrative Agent)
informs the JBIC Agent on behalf of JBIC, the Administrative Agent, the Borrower
and each other Senior Facility Lender in writing that each condition precedent
identified in the applicable Senior Facility Lender Negative CP Notice has
either been satisfied or waived (a "Senior Facility Lender Withdrawal Notice").
Upon the receipt of a Senior Facility Lender Withdrawal Notice, the Borrower may
re-deliver the Notices of Borrowing dated the date such Notices are redelivered,
in which it shall propose the new requested Disbursement Date for the Advance
requested in such Notice of Borrowing; provided, that such new requested


                                        9



Disbursement Date shall be no earlier than six (6) Business Days after receipt
by the parties referred to above of such Senior Facility Lender Withdrawal
Notice, and provided, further, that the issuance of any Senior Facility Lender
Withdrawal Notice, shall not waive any right of any Senior Facility Lender not
to make an Advance on such requested Disbursement Date if any condition
precedent has not been satisfied or waived as of such date.

     (d) Subject to the satisfaction of the foregoing and of the conditions
precedent set forth in Section 5.01 or 5.02, as the case may be, on the relevant
Disbursement Date, no later than 1:00 P.M. (New York City time) on each
requested Disbursement Date for a Base Advance, the JBIC Agent shall transfer
the proceeds of the Senior Facility Loans to be provided under the JBIC Loan
Agreement, KfW shall transfer the proceeds of the Senior Facility Loans to be
provided by KfW and the Administrative Agent shall transfer the proceeds of the
Senior Facility Loans to be provided by the Commercial Banks, in each case, to
the Borrower for deposit in the Onshore Dollars Account.

     2.06 Stand-By Advances Specific Disbursement Mechanics.

     (a) Each request for a Stand-By Advance shall be made under the Commercial
Banks Loan Agreement and on a Pro Rata Basis with respect to each of the
Commercial Banks by delivery by the Borrower of a Notice of Borrowing to the
Administrative Agent. The Notices of Borrowing delivered as contemplated above
shall direct that the proceeds of each Stand-By Advance be deposited into the
Onshore Dollars Account, in accordance with the Master Security Agreement. Each
such Notice of Borrowing shall be delivered at least 10 New York Business Days
before the relevant Disbursement Date, which Disbursement Date shall be a New
York Business Day.

     (b) Subject to the satisfaction of the foregoing and of the conditions
precedent set forth in Section 5.02 on the relevant Disbursement Date, no later
than 1:00 P.M. (New York City time) on each requested Disbursement Date for a
Stand-By Advance, the Administrative Agent shall transfer the proceeds of the
Senior Facility Loans to be provided by the Commercial Banks to the Borrower for
deposit in the Onshore Dollars Account.

     2.07 Several Obligations. The obligations of each Senior Facility Lender
hereunder shall be several not joint. No Senior Facility Lender shall have any
obligation to any MPA Party for the failure by any other Senior Lender to make
any Senior Loans required to be made by such Senior Lender or to comply with any
other obligation of such Senior Lender hereunder or under any other Financing
Document to which it is a party.


                                       10



     2.08 Promissory Notes.

     (a) On each Disbursement Date (including on the Closing Date), the Borrower
shall deliver to each Senior Facility Lender duly executed promissory notes
(pagares) (each, a "Promissory Note") in Spanish together with an English
translation thereof, substantially in the forms attached to the respective
Senior Facility Loan Agreement, issued in favor of, respectively, each Senior
Facility Lender making an Advance on such date, with blanks appropriately
completed in conformity herewith and the respective Senior Facility Loan
Agreement, which shall (i) be payable to the order of such Senior Facility
Lender, (ii) be in the principal amount equal to the Advance made by such Senior
Facility Lender on such Disbursement Date, (iii) be payable in installments and
mature on the Final Maturity Date, (iv) bear interest as provided in Section
3.02, and (v) be dated on such Disbursement Date.

     (b) On the first Payment Date following the Completion Release Date, the
Borrower shall (i) cancel all Promissory Notes previously issued to a given
Senior Facility Lender and (ii) replace such Promissory Notes by a single
Promissory Note which shall be (x) issued for a principal amount equal to the
aggregate amount of all Advances made by such Senior Facility Lender minus all
principal repayments made to such Senior Facility Lender up to (and including)
the date of replacement and (y) issued on identical terms and conditions as the
Promissory Notes being replaced by such single Promissory Note except that (1)
in the case of the Promissory Notes issued in favor of the Commercial Banks, the
Margin shall be adjusted to reflect the Margin (as defined in the Commercial
Banks Loan Agreement) applicable in the periods following the Completion Release
Date and (2) in the case of the Promissory Notes issued in favor of JBIC, the
interest (as described in Section 5.01 of the JBIC Loan Agreement) shall be
adjusted to reflect the interest applicable in the period following the
Completion Release Date. Notwithstanding the foregoing, in the case of a Senior
Facility Lender that is a Commercial Bank, one Promissory Note shall be issued
for its Base Advances and one separate Promissory Note shall be issued for its
Stand-By Advances and in the case of JBIC, one Promissory Note shall be issued
for its Tranche A Advances and one separate Promissory Note shall be issued for
its Tranche B Advances. Borrower shall also cancel and replace the Promissory
Notes issued to KfW in connection with an exercise by Borrower of its right to
convert Floating Rate Loans into Fixed Rate Loans as such terms are defined in
the KfW Loan Agreement.

     (c) The execution and delivery by the Borrower of the Promissory Notes
described above shall not affect in any way whatsoever the rights or obligations
of the Borrower under this Agreement, and the rights and claims of the Senior
Facility Lenders under the Promissory Notes shall not replace or supersede the
rights and claims of the Senior Facility Lenders hereunder, provided that
payment of any part of principal of any Promissory Note shall, to the extent
that such payment if made hereunder would discharge Senior Facility Loans
Obligations in respect of the payment of principal of the


                                       11



Senior Facility Loan evidenced by such Promissory Note, discharge such
obligation pro tanto, and the payment of any principal of a Senior Facility Loan
in accordance with the terms hereof shall discharge the obligations of the
Borrower under the Promissory Note evidencing such Senior Facility Loan pro
tanto.

     (d) Upon an assignment by a Senior Facility Lender of any of its interest
hereunder as permitted under Section 12.13, the Promissory Note of the assignor
may be cancelled, in which case the Borrower shall, upon the written request of
the assignor, issue new Promissory Notes to the assignor (to the extent the
assignor continues to maintain certain interest hereunder after such assignment)
and the assignee.

     (e) Upon discharge of all Senior Facility Loans Obligations under this
Agreement, each Senior Facility Lender shall cancel and return each Promissory
Note to the Borrower.

     (f) The Promissory Notes shall be non negotiable but may be transferred by
assignment together with the assignment of an Advance that is permitted in
accordance with Section 12.13(c) hereof.

     2.09 Senior Facility Lender's Failure to Fund.

     (a) Unless the Administrative Agent shall have been notified by any Senior
Facility Lender (each, a "Payor") prior to the date on which the Payor is to
make payment pursuant to Section 2.05(d) to the Borrower or the Administrative
Agent of the proceeds of an Advance to be made by such Payor hereunder (such
payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
Borrower.

     (b) If the Payor has not in fact made the Required Payment to the
Administrative Agent, then (without limiting the claim any Person may have on
account of non-receipt of the Required Payment), the Payor shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average cost of funding of the Administrative Agent for the
period from and including the date on which the Required Payment was required to
be made to the date the Payor makes such amount immediately available to the
Administrative Agent.

     (c) The Administrative Agent shall promptly notify each Senior Facility
Lender and the Borrower of any receipt of notice by the Administrative Agent
from a Senior Facility Lender that such Senior Facility Lender does not intend
to make payment to the Administrative Agent of the proceeds of an Advance.


                                       12



                                   ARTICLE III

                           COMMON LENDING ARRANGEMENTS

     3.01 Repayment of the Advances.

     (a) Each Senior Facility Loan Agreement shall provide that, on each Payment
Date on or prior to the Final Maturity Date (subject to the timing and location
provisions specified in each Senior Facility Loan Agreement), the Borrower shall
repay to or for the account of each Senior Facility Lender that is a party to
such Senior Facility Loan Agreement an amount equal to the product of (i) the
aggregate amount of all Advances of such Senior Facility Lender, and (ii) the
Scheduled Repayment Percentage as set forth in the Repayment Schedule attached
hereto as Schedule B applicable to such Payment Date.

     (b) The Peruvian Bonds Indenture shall provide that, on each Payment Date
on or prior to the Final Maturity Date, the Borrower shall repay to the Common
Representative for the account of the Peruvian Bondholders, an amount equal to
the product of (i) the principal amount of Peruvian Bonds issued by the Borrower
and (ii) the Scheduled Repayment Percentage applicable to such Payment Date.

     3.02 Interest.

     (a) Each Senior Facility Loan Agreement shall provide that, on each
Interest Payment Date on or prior to the Final Maturity Date, the Borrower shall
pay to or for the account of each Senior Facility Lender that is a party to such
Senior Facility Loan Agreement, interest on such Senior Facility Lender's
Outstanding Base Amount, accrued during the Interest Period ending on the day
immediately preceding such Interest Payment Date (and pro rated with respect to
amounts advanced after the beginning of such Interest Period), at the interest
rate set forth in such Senior Facility Loan Agreement.

     (b) The Commercial Banks Loan Agreement shall provide that, on each
Interest Payment Date on or prior to the Final Maturity Date, the Borrower shall
pay to or for the account of each Commercial Bank, interest on such Commercial
Bank's Outstanding Stand-By Amount, accrued during the Interest Period ending on
the day immediately preceding such Interest Payment Date (and pro rated with
respect to amounts advanced after the beginning of such Interest Period), at the
interest rate set forth in the Commercial Banks Loan Agreement.

     (c) The Peruvian Bonds Indenture shall provide that, on each Interest
Payment Date on or prior to the Final Maturity Date, the Borrower shall pay to
the Common Representative for the account of the Peruvian Bondholders, interest
on the Outstanding Bond Amount accrued during the Interest Period ending on the
day


                                       13



immediately preceding such Interest Payment Date (and pro rated with respect to
debt issued since the beginning of such Interest Period), at the rate set forth
in such Peruvian Bonds Indenture.

     (d) Each Senior Facility Loan Agreement and the Peruvian Bonds Indenture
shall provide that accrued interest for each Interest Period on each Senior Loan
shall be payable on the Interest Payment Date at the end of such Interest
Period, or upon any earlier payment or prepayment thereof (but only on the
principal amount so paid or prepaid).

     3.03 Senior Facility Loans Pari Passu. All Senior Facility Loans shall rank
pari passu without any preference among Senior Facility Loans by reason of date
of incurrence, currency of repayment or otherwise.

     3.04 Pro Rata Payments.

     (a) After giving effect to any incremental payment for Indemnified Tax
withholding, if any, and except for payment of Funding Losses and mandatory
prepayment contemplated in Sections 3.11 and 3.12, each payment or prepayment
made by the Borrower to a Senior Facility Lender in respect of the Senior Loans
Obligations shall be a Pro Rata Payment, except that:

          (i) The Borrower shall have the right to use the proceeds of the
     issuance of the Peruvian Bonds to prepay the Outstanding Stand-By Amount of
     the Commercial Banks without prepaying any other Senior Loans; and

          (ii) The Borrower shall have the right to prepay the Outstanding
     Advance Amounts of the Senior Facility Lenders without prepaying the
     Outstanding Bond Amounts of the Peruvian Bondholders.

     (b) The Borrower shall not prepay any of the Peruvian Bonds before the
Final Maturity Date, unless the Borrower concurrently makes a pro rata
prepayment of the Senior Facility Loans (based on the then Outstanding Advance
Amount of the Senior Lenders).

     3.05 Voluntary Prepayment. Subject to Section 3.04, the Borrower shall have
the right to prepay the Outstanding Advance Amount of the Senior Facility
Lenders, so long as the aggregate amount of any such prepayment equals at least
US$10 million and subject to payment of the premium set forth in the relevant
Senior Loan Document, if any, in whole or in part on any Payment Date upon at
least 60 days' prior notice.


                                       14



     3.06 Mandatory Prepayment.

     (a) Upon each receipt by the Borrower of claim proceeds with respect to a
Total Loss of the Sulfide Project or the Current Operations, the Borrower shall
within 30 days after such receipt apply the proceeds so received to prepay the
Outstanding Advance Amounts of the Senior Facility Lenders.

     (b) Upon each receipt by the Borrower of the proceeds of property Insurance
for physical loss or damage (which shall not include any sum paid in settlement
of a liability to a third party nor any sum representing the proceeds of
business interruption Insurance), the Borrower shall promptly deposit all such
proceeds into the Proceeds Account and:

          (i) Subject to paragraph (f) below, if the proceeds so received are in
     excess of US$10 million but not more than US$100 million, the Borrower
     shall within 60 days after receipt of such proceeds apply the proceeds so
     received to prepay the Outstanding Advance Amounts of the Senior Facility
     Lenders, unless the Borrower (x) intends to use such proceeds for the
     repair, reconstruction or replacement of the lost or damaged property, or
     to replenish the Proceeds Account to the extent of any such repair,
     reconstruction or replacement expenses actually paid with funds credited to
     the Proceeds Account and (y) notifies to the Administrative Agent in
     writing within 30 days after receipt of such proceeds its plans for the
     repair, reconstruction or replacement of the lost or damaged property or
     the status of implementation of such plans if already started; and

          (ii) If the proceeds so received are in excess of US$100 million, the
     Borrower shall within 60 days after receipt of such proceeds apply the
     proceeds so received to prepay the Outstanding Advance Amounts of the
     Senior Facility Lenders, unless the Borrower submits a plan for the use of
     such proceeds to the Administrative Agent and the Independent Engineer
     within 30 days of receipt and such plan is approved by the Administrative
     Agent (acting upon instructions from the Majority Facility Lenders, taking
     into consideration the nature of the loss, the reasonableness of the
     Borrower's plan and the Outstanding Advance Amount and the ability to pay
     the Senior Facility Loans Obligations as and when they become due),
     provided that such approval shall be deemed given in the absence of a
     response from the Administrative Agent within 30 days from receipt of the
     Borrower's request for approval.

     (c) Upon each receipt by Borrower of expropriation proceeds in connection
with an expropriation by the Peruvian government of any of its asset or assets,
the Borrower shall promptly deposit all such expropriation proceeds into the
Proceeds Account and:


                                       15



          (i) Subject to paragraph (f) below, if the proceeds so received are in
     excess of US$10 million but below US$100 million, except if such proceeds
     related to an expropriation of Non-Replaceable Property, the Borrower shall
     within 60 days after receipt of such proceeds apply the proceeds so
     received to prepay the Outstanding Advance Amounts of the Senior Facility
     Lenders, unless the Borrower (x) intends to use such proceeds for the
     replacement of the expropriated property or to replenish the Proceeds
     Account to the extent of any replacement expenses actually paid with funds
     credited to the Proceeds Account and (y) notifies to the Administrative
     Agent in writing within 30 days after receipt of such proceeds its plans
     for the replacement of the expropriated property or the status of
     implementation of such plans if already started; and

          (ii) If the proceeds so received are in excess of US$100 million or in
     excess of US$10 million but relate to an expropriation of Non-Replaceable
     Property, the Borrower shall within 60 days after receipt of such proceeds
     apply the proceeds so received to prepay the Outstanding Advance Amounts of
     the Senior Facility Lenders, unless the Borrower submits a plan for the use
     of such proceeds to the Administrative Agent and the Independent Engineer
     within 30 days of receipt and such plan is approved by the Administrative
     Agent (acting upon instructions from the Majority Facility Lenders, taking
     into consideration the nature of the loss, the reasonableness of the
     Borrower's plan and the Outstanding Advance Amount and the ability to pay
     the Senior Facility Loans Obligations as and when they become due),
     provided that such approval shall be deemed given in the absence of a
     response from the Administrative Agent within 30 days from receipt of the
     Borrower's request for approval.

     (d) If 90 days after the making of the Advance made on or immediately prior
to the Availability Period End Date, proceeds thereof have not been fully
applied to the payment of Project Costs, the Borrower shall, within 30 days,
apply such remaining proceeds to prepay the Outstanding Advance Amounts of the
Senior Facility Lenders.

     (e) The Borrower may also be required to prepay the Outstanding Advance
Amounts of one or several Senior Facility Lenders as and when contemplated in
Section 3.12.

     (f) During the Continuance of a Borrower Event of Default, but prior to
delivery of an Enforcement Direction, the application of the proceeds in clauses
(b)(i) and (c)(i) of this Section 3.06 shall be subject to the delivery by the
Borrower, and approval by the Administrative Agent, of a plan for the use of
such proceeds as provided in clauses (b)(ii) and (c)(ii), as applicable, of this
Section 3.06; provided, however, that upon delivery of a Borrower Enforcement
Direction the direction contained therein shall apply.

     (g) On the Debt Buy-Down Closing Date, the Borrower shall prepay the
Outstanding Advance Amounts of the Senior Facility Lenders in an amount equal to
the


                                       16



difference between the Retired Principal Senior Loan Amount and the aggregate
portion of the Purchased Principal Senior Loan Amount purchased and paid for by
all Parent Companies.

     3.07 Partial Payments. If at any time at which any Senior Loans Obligations
are payable to a Senior Facility Lender such Senior Facility Lender receives
insufficient funds to pay in full all Senior Loans Obligations payable to such
Senior Facility Lender at such time pursuant to its Senior Loan Document or the
other Financing Documents, the funds so received by such Senior Facility Lender
at such time shall be deemed to be applied in order of priority for purposes of
computations hereunder and under the Senior Loan Document and the other
Financing Documents, as follows: first, to fees, commissions, indemnities,
expenses and all amounts (other than principal of and interest on the Senior
Loans) payable to such Senior Facility Lender; second, to interest (including
post-default interest) on the Senior Loans held by such Senior Facility Lender;
and third, to principal of the Senior Loans held by such Senior Facility Lender,
applied to reduce each outstanding principal installment ratably; provided that
if a Senior Loans Obligation has been accelerated, funds may be applied in any
order of priority as any Senior Facility Lenders holding such accelerated Senior
Loans Obligation may determine.

     3.08 Application of Prepayments Other Than Prepayments in Full. Each
prepayment of principal made to a Senior Facility Lender on account of Senior
Loans shall (unless such prepayment repays in full the Senior Loans held by such
Senior Facility Lender) be applied to prepay each outstanding installment of
principal of Senior Loans under such Senior Facility Lender's Senior Loan
Document ratably.

     3.09 Taxes.

     (a) Any and all payments made by or on account of the Borrower to a Senior
Facility Lender in respect of any obligation hereunder or under the Financing
Documents (including, without limitation, all payments of principal, interest,
premium and fees) shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future Taxes (excluding
(i) Taxes imposed on or measured by the net income, profits, or capital of a
Senior Facility Lender by the jurisdiction under the laws of which such Senior
Facility Lender was incorporated or organized, (ii) Taxes which would not have
been imposed on a Senior Facility Lender but for a change by such Senior
Facility Lender of its lending office, (iii) Taxes which would not have been
imposed on a Senior Facility Lender but for the transfer by such Senior Facility
Lender of an interest in its Advances or (iv) Taxes which would not have been
imposed on a Senior Facility Lender but for such Senior Facility Lender's having
a place of business in the jurisdiction imposing the Tax (other than a place of
business arising from the transactions contemplated by the Financing Documents
or from having executed, delivered, performed its obligations or received a
payment under, or enforced any of the Financing Documents)), Taxes described in
the immediately preceding


                                       17



clauses (i) through (iv) being referred to herein as the "Excluded Taxes" and
Taxes, other than the Excluded Taxes being referred to herein as "Indemnified
Taxes", now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority of Peru, unless such deduction or withholding is required
by applicable Government Rule, in which case paragraph (b) below shall apply.

     (b) If the Borrower shall be required by law to deduct any Indemnified
Taxes now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of Peru from or in respect of any sum payable hereunder
or under the Senior Facility Loan Agreements, the Borrower shall, at its option,
either (i) pay to the Senior Facility Lender in respect of which such deduction
or withholding is required to be made, such additional amount (the "Additional
Tax Amount") as may be necessary so that after all required deductions and
withholdings (including, without limitation, deductions and withholdings
applicable to additional sums payable under this Section 3.09(b)), such Senior
Facility Lender receives on the due date thereof an amount equal to the sum it
would have received, had no such deduction or withholding been made, or (ii)
assume the payment of the Indemnified Tax and pay directly the full amount to
the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Senior Facility Lender equals the
amount it would have received if the Borrower had not been required by law to
deduct such Indemnified Tax.

     (c) The Borrower shall pay any and all present or future stamp duty,
documentary, registration, excise, recording, notary, value added or similar
Taxes imposed by any Governmental Authority by reason of the preparation,
execution, issuance, delivery, registration, notarization, filing, recording,
amendment, supplement, waiver, modification, performance or enforcement of this
Agreement or any other Financing Document ("Other Taxes").

     (d) Without duplication of Section 12.21(c), the Borrower will indemnify
the Administrative Agent and each Senior Facility Lender against, and reimburse
the Administrative Agent and each Lender on demand for, any Indemnified Taxes
paid directly by the recipient of the payment with respect to which such
Indemnified Tax is levied in circumstances where the Borrower has failed to
comply with its obligation to pay Additional Tax Amount as contemplated in
Section 3.09(b) and any loss, liability, claim or expense, including interest,
penalties, judgments, costs or disbursements and reasonable and documented legal
fees, which the Administrative Agent or any Senior Facility Lender may incur at
any time arising out of or in connection with any failure of the Borrower to
make any payment of such Indemnified Taxes when due.

     (e) Each Senior Facility Lender shall, from time to time, following receipt
of a written request therefor by the Borrower, furnish to the Borrower any form
or certificate and other assistance reasonably requested that may be necessary
to establish


                                       18



any available exemption from, or reduction in the amount of, Indemnified Taxes,
including:

          (i) A certification as to the fact that such Senior Facility Lender is
     "unrelated" to the Borrower, in the form set forth in Schedule E, and any
     other certification as may be necessary under Peruvian law to qualify for
     the reduced rate of withholding tax; and

          (ii) In the case of Senior Loans from JBIC and KfW and at the cost of
     the Borrower, affidavits or certifications issued by Authorized Officers of
     JBIC and KfW (and duly certified by a Public Notary in the jurisdiction
     where they are issued and by a Peruvian consul) confirming the matters set
     forth in Schedule F.

     (f) The Borrower shall provide to the Senior Facility Lenders receipt or
other evidence of payment received by the Borrower from the applicable
Governmental Authority of Peru in connection with the payment by Borrower of any
Indemnified Tax required to be withheld or assessed in respect of any sum
payable hereunder or under the Senior Facility Loan Agreements.

     (g) The agreements in this Section 3.09 shall survive the termination of
this Agreement.

     3.10 Single Senior Lender Suspension or Termination.

     (a) If JBIC or KfW shall have suspended, cancelled or terminated its
Commitment (a "Suspending Lender"), in whole or in part, in accordance with the
terms of Section 10.02 of the JBIC Loan Agreement or Section 12.03 of the KfW
Loan Agreement, as the case may be, by a notice delivered to the Borrower and
the Administrative Agent, each other Senior Facility Lender shall be entitled to
suspend its obligation to make additional Advances, provided that (i) such
suspension shall terminate (and each Senior Facility Lender shall no longer be
entitled to suspend its obligation to make additional Advances solely by reason
of such suspension) if the Suspending Lender rescinds the actions described in
such notice or if a Replacement Loan Agreement is entered into for the entire
amount of the Suspending Lender's undrawn Base Committed Amount and (ii) such
suspension shall not be effective with respect to a given requested Advance (and
each Senior Facility Lender shall no longer be entitled to suspend its
obligation to make a given requested Advance solely by reason of such
suspension) if a Bridge Loan Agreement is entered into for an amount at least
equal to the Suspending Lender's pro rata share of such requested Advance.

     (b) During a period of 180 days following the date on which the Suspending
Lender shall have first given to the Borrower notice of such suspension,
cancellation, or termination:


                                       19



          (i) The Borrower shall have the right to enter into a Replacement Loan
     Agreement with one or several of the Parent Companies or their Affiliates
     or any third parties (which third party shall be an Investment Grade
     Entity) (a "Replacement Lender"), which shall enter into a New Party
     Accession Agreement to become a party, as a Senior Facility Lender, to this
     Agreement, the Completion Guarantee, the Master Security Agreement and the
     Transfer Restrictions Agreement, pursuant to which such Replacement Lender
     shall undertake to make Advances to the Borrower in an amount equal to the
     undrawn portion of the Suspending Lender's Base Committed Amount.

          (ii) The Borrower shall have the right to request the Suspending
     Lender in writing to, and within 10 days of receipt of such written request
     the Suspending Lender shall (subject, if KfW is the Suspending Lender, to
     receipt of any necessary German Governmental Approvals), assign all Base
     Advances made by the Suspending Lender to the Replacement Lender for an
     amount (payable in cash at the closing of such assignment) equal to the
     Suspending Lender's Outstanding Base Amount plus accrued and unpaid
     interest to the date of the closing of such assignment.

          (iii) The Borrower shall have the right to enter into a Bridge Loan
     Agreement with one or several of the Parent Companies or their Affiliates
     or any third parties (which third party shall be an Investment Grade
     Entity) (a "Bridge Loan Provider"). The provider of such bridge loan shall
     enter into a New Party Accession Agreement to become a party, as a Senior
     Facility Lender, to this Agreement, the Completion Guarantee, the Master
     Security Agreement and the Transfer Restrictions Agreement. Such Bridge
     Loan Agreement may (without any consent from the Senior Facility Lenders)
     (x) subsequently be assigned to a Replacement Lender or to the Suspending
     Lender or (y) subsequently be prepaid (regardless as to whether or not
     other Senior Facility Loans are also prepaid) out of the proceeds of a
     Replacement Loan Agreement.

     (c) If, by the end such 180-day period, (i) the Suspending Lender shall not
have rescinded the action described in such notice or (ii) the Borrower shall
not have entered into a Replacement Loan Agreement with a Replacement Lender as
contemplated under Section 3.10(b)(i), each other Senior Facility Lender shall
have the right to terminate its Commitment.

     3.10A. Single Lender Acceleration.

     (a) If JBIC shall have accelerated its Outstanding Base Amount, pursuant to
the terms of Section 10.02 of the JBIC Loan Agreement, by a notice delivered to
Borrower and the Administrative Agent, each other Senior Facility Lender shall
be entitled to suspend its obligation to make additional Advances, provided that
such suspension shall terminate (and each Senior Facility Lender shall no longer
be entitled


                                       20



to suspend its obligation to make additional Advances solely by reason of such
suspension) if (i) JBIC rescinds the actions described in such notice or (ii)
the Borrower pays to JBIC the accelerated amount of the JBIC Outstanding Base
Amount with the proceeds of a Replacement Loan entered into with one or several
of the Parent Companies or their Affiliates or any third parties in an amount
equal to the accelerated amount of the JBIC Outstanding Base Amount.

     (b) If, 180 days after the date of acceleration by JBIC of its Outstanding
Base Amount, (i) JBIC has not rescinded the action described in such notice and
(ii) the Borrower has failed to pay JBIC as contemplated under clause (ii) of
clause (a) of this Section 3.10A, each other Senior Facility Lender by written
notice to the Borrower shall have the right:

          (i) To declare its Commitment to be cancelled and terminated whereupon
     the same shall be immediately cancelled and terminated; and/or

          (ii) To declare all Senior Loans Obligations payable to such Senior
     Facility Lender to be immediately due and payable, whereupon the same shall
     become immediately due and payable, without further notice and without
     presentment, demand, protest or other notice of any kind, all of which are
     hereby expressly waived by the Borrower.

     In addition, for the purpose of the exercise of remedies under the Master
Security Agreement, an MPA Event of Default shall be deemed to have occurred on
the date of acceleration by JBIC of its Outstanding Base Amount.

     (c) If JBIC shall have both suspended, cancelled or terminated its
Commitment and accelerated its Outstanding Base Amount, each other Senior
Facility Lender and the Borrower shall have the rights set forth in Section 3.10
(with respect to the suspension, cancellation or termination of JBIC's
Commitment) and Section 3.10A (with respect to the acceleration of the JBIC
Outstanding Base Amount).

     3.11 Funding Losses. The Borrower agrees to indemnify each Senior Facility
Lender and to hold such Senior Facility Lender harmless from any documented
loss, expense, liability or cost ("Funding Losses") which such Senior Facility
Lender may reasonably sustain or incur as a consequence of (i) any payment or
prepayment by the Borrower of principal of or interest on such Senior Facility
Lender's Outstanding Advance Amount for any reason (including, upon acceleration
in accordance with the Master Security Agreement or voluntary prepayment made
pursuant to Section 3.05) on any date other than an Interest Payment Date or
Payment Date, as the case may be, (ii) failure of the Borrower to pay any
principal of or interest on such Senior Facility Lender's Outstanding Advance
Amount, or any fee or other amount due hereunder when due (whether at the stated
maturity, by acceleration or otherwise) or (iii) after delivery of a Notice of
Borrowing, failure by the Borrower, for any reason, to satisfy any conditions


                                       21



precedent in Article V hereof. The amount of any Funding Losses of each Senior
Facility Lender and a reasonably detailed description of the manner in which
such amount was determined shall be set forth in certificates from such Senior
Facility Lender, which certificates shall accompany a notice under this Section.
Each Senior Facility Lender shall deliver such notice and certificates to the
Borrower as promptly as practicable after such Senior Facility Lender becomes
aware of the Funding Losses described therein.

     3.12 Illegality.

     (a) Notwithstanding any other provision herein, if the adoption of or any
change in any Government Rule or in the interpretation or application thereof by
any Governmental Authority shall make it unlawful for any Senior Facility Lender
to make or maintain an Advance as contemplated by this Agreement, the obligation
of such Senior Facility Lender hereunder to make Advances shall terminate, and
such Senior Facility Lender shall have the right, subject to paragraph (b)
below, to declare its Outstanding Advance Amount (if any) together with interest
thereon, immediately due and payable.

     (b) Such Senior Facility Lender shall take all commercially reasonable
steps to change the lending office for its Commitment or Advances or assign such
portion of its Commitment or such Advance and transfer all of its rights and
obligations hereunder and under all other Financing Documents to which it is a
party, to a financial institution willing to purchase such assignment if such
assignment will avoid the need for the required repayment contemplated by
Section 3.12(a), provided that such Senior Facility Lender shall not be required
to take any step that, in its sole discretion, would result in any material cost
or that would otherwise be disadvantageous to such Senior Facility Lender.

                                   ARTICLE IV

                                      FEES

     4.01 Commitment Fee. Each Senior Facility Loan Agreement shall contemplate
that for the period from the date hereof to and including the Availability
Period End Date, the Borrower shall pay to the Senior Facility Lenders that are
parties to such Senior Facility Loan Agreement a commitment fee which shall
start accruing on the date hereof and shall be payable in accordance with the
terms of the applicable Senior Facility Loan Agreement.

     4.02 Other Fees. The Borrower shall timely pay to each Senior Facility
Lender all other amounts due pursuant to the Senior Facility Loan Agreement to
which such Senior Facility Lender is a party.


                                       22



                                    ARTICLE V

                              CONDITIONS PRECEDENT

     5.01 Conditions Precedent to Initial Disbursements of Base Advances. The
obligation of each Senior Facility Lender to make the initial disbursement of a
Base Advance shall be subject to the satisfaction, or waiver by the
Administrative Agent, with the prior consent of each Senior Facility Lender, on
or prior to the Closing Date, of the following conditions precedent and to the
receipt by the Administrative Agent of the following documents, each of which
shall be satisfactory to each Senior Facility Lender in form and substance:

     (a) Authorizations, etc.

          (i) The Administrative Agent shall have received certified copies of
     the organizational deeds of the Borrower and of the actions of the board of
     directors or other governing body of the Borrower taken to authorize the
     execution, delivery and performance of this Agreement, each other Closing
     Document to which it is a party, and the performance by it of its
     obligations hereunder and thereunder.

          (ii) The Administrative Agent shall have received certified copies of
     the organizational deeds of each Shareholder and Parent Company and of the
     actions of the board of directors or other governing body of such
     Shareholder and Parent Company taken to authorize the execution, delivery
     and performance by such Shareholder and Parent Company of each Closing
     Document to which it is a party, and the performance by it of its
     obligations thereunder.

     (b) Incumbency and Signatures.

          (i) The Administrative Agent shall have received certificates of the
     Borrower in respect of the authority and incumbency, and containing a
     specimen signature, of each Person who has signed or will sign on its
     behalf any Closing Document to which it is a party, or who will, until
     replaced by another Person or Persons duly authorized for that purpose,
     otherwise act as representative for the purposes of signing documents in
     connection with this Agreement, the other Closing Documents to which it is
     a party and the transactions contemplated hereby and thereby.

          (ii) The Administrative Agent shall have received certificates of each
     Shareholder and Parent Company in respect of the authority and incumbency,
     and containing a specimen signature, of each Person who has signed or will
     sign on its behalf any Financing Document to which it is a party, or who
     will, until replaced by another Person or Persons duly authorized for that
     purpose, otherwise act as


                                       23



     representative for the purposes of signing documents in connection with
     this Agreement, the other Financing Documents to which it is a party and
     the transactions contemplated hereby and thereby.

     (c) Execution and Delivery. This Agreement and each other Closing Document
(other than the Security Documents) shall have been duly executed and delivered
by each of the parties named as a proposed signatory hereto and thereto and
shall be in full force and effect, and any copies of such agreements or
documents delivered shall be accompanied by a certification from the Borrower
that it is a true, correct and complete copy of any such agreement or document.

     (d) Security Documents. Each Security Document shall have been duly
executed and delivered by the party required to execute or grant the same, shall
be in full force and effect, and all actions required to be taken thereunder to
perfect the security interest created thereunder shall have been taken.

     (e) Consents to Assignment. Each counterparty under the following
agreements shall have delivered to the Administrative Agent consents (i) to the
assignment by the Borrower of its rights under, respectively, the Operator's
Agreement, the Construction Agreements and the Shareholders Agreement, in the
forms attached hereto as Exhibit H-1, H-2 and H-3, (ii) to the assignment by the
Borrower of its rights and obligations under the Transportation Agreements, in
the forms attached as Exhibit I and (iii) the Borrower shall have provided a
notarized copy of the notice delivered to the counterparty to each of the Power
Supply Agreements, the Transportation Agreements and Port Services Agreement
identifying each of the Secured Parties and informing them of the assignment by
the Borrower of all of its rights and obligations (cesion de posicion
contractual) in the forms attached as Exhibit J.

     (f) Governmental Approvals. Each Core Peruvian Governmental Approval listed
in Part I of Schedule 6.03(c) as a Core Peruvian Governmental Approval that
needs to be made or obtained prior to the Closing Date shall have been made or
obtained to the satisfaction of the Senior Facility Lenders (and a copy thereof
certified by a notary shall have been delivered to the Administrative Agent),
and shall be in full force and effect.

     (g) Legal Opinions. The following legal opinions, each dated the Closing
Date, in the English language addressed to the Administrative Agent and each
Senior Facility Lender shall have been delivered:

          (i) the opinion of Rodrigo, Elias & Medrano, Abogados, special
     Peruvian counsel to the Borrower, substantially in the form attached as
     Appendix I-1;


                                       24



          (ii) the opinion of Debevoise & Plimpton LLP, special New York counsel
     to the Borrower, substantially in the form attached as Appendix I-2;

          (iii) the opinion of Estudio Luis Echecopar Garcia, special Peruvian
     counsel to the Senior Facility Lenders, substantially in the form attached
     as Appendix I-3;

          (iv) the opinion of Milbank, Tweed, Hadley & McCloy LLP, special New
     York counsel to the Senior Facility Lenders, substantially in the form
     attached as Appendix I-4;

          (v) the opinion of Emmet, Marvin & Martin, LLP, special New York
     counsel to the Trustee, substantially in the form attached as Appendix I-5;

          (vi) the opinion of Rodrigo, Elias & Medrano, Abogados, on behalf of
     the Operator, substantially in the form attached as Appendix I-6;

          (vii) the opinion of Rodrigo, Elias & Medrano, Abogados, in connection
     with the Power Supply Agreement (110 MW) dated December 31, 2004, between
     the Borrower and ElectroPeru S.A. and the Power Supply Agreement (46 MW),
     dated December 31, 2004, between the Borrower and ElectroPeru S.A.,
     substantially in the form attached as Appendix I-7;

          (viii) the opinion of Rodrigo, Elias & Medrano, Abogados, in
     connection with the Power Supply Agreement, dated December 29, 2004,
     between the Borrower and Empresa de Generacion Electrica de Arequipa S.A. -
     EGASA, substantially in the form attached as Appendix I-8;

          (ix) opinion of Sullivan & Cromwell LLP, special New York counsel to
     SC and SMM, substantially in the form attached as Appendix I-9;

          (x) the opinion of Sullivan & Cromwell LLP, special New York counsel
     to SMM, substantially in the form attached as Appendix I-10;

          (xi) the opinion of Sakai & Nimura, special Japanese counsel to SMM,
     substantially in the form attached as Appendix I-11;

          (xii) the opinion of Sakai & Nimura, special Japanese counsel to SC
     and SMM, substantially in the form attached as Appendix I-12;

          (xiii) the opinion of Allen & Overy LLP, special Dutch counsel to the
     Sumitomo Participant, substantially in the form attached as Appendix I-13;

          (xiv) the opinion of Estudio Aurelio Garcia Sayan Abogados,
     substantially in the form attached as Appendix I-14.


                                       25



     (h) Closing of New Equity Contributions. The capital increase contemplated
in Section 2 of the Participation Agreement shall have been completed and shall
have resulted in funds of no less than U.S.$442.7 million (less transactional
expenses) being contributed to the Borrower as equity and no more than
U.S.$147,172,896.61 being paid out as a dividend to Shareholders since January
1, 2005, as evidenced by (i) a copy certified by a Peruvian notary of the
minutes of the Board of Directors of the Borrower of June 1, 2005, which
declared the relevant conditions precedent satisfied and the capital increase
contemplated in Section 2 of the Participation Agreement perfected, and (ii) a
copy certified by a Peruvian notary (testimonio) of the public deed of the
capital increase contemplated in Section 2 of the Participation Agreement.

     (i) Opening of Accounts. The Trustee and the Borrower shall have
established each of the Accounts contemplated under Section 4.01 of the MSA.

     (j) Insurance. The Borrower shall have delivered to the Administrative
Agent and the Insurance Consultant such evidence of insurance required pursuant
to Section C(5) of Appendix II and brokers' reports as required pursuant to
Section C(6) of Appendix II which reports shall be dated not earlier than 20
Business Days prior to the Closing Date. The Insurance policies then required to
be in effect pursuant to Appendix II shall each be in full force and effect and
shall have been endorsed in accordance with the requirements thereof, and the
Insurance Consultant shall have issued a report confirming the insurance
coverage (including reinsurance coverage) obtained by the Borrower complies with
the requirements of Appendix II and covering such other matters as the Senior
Facility Lenders may reasonably request. Notwithstanding anything to the
contrary herein, this condition shall not need to be satisfied more than 7
Business Days prior to the Closing Date.

     (k) Representations and Warranties. The representations and warranties of
the Borrower set forth in Article VI, the representations and warranties of the
Parent Companies set forth in Article VI of the Completion Guarantee and the
representations and warranties of the Shareholders and the Parents in Section
3.01 of the Transfer Restrictions Agreement shall be true and correct in all
material respects as of the Closing Date (other than representations and
warranties which by their terms are expressly limited to the date of this
Agreement or any other particular date, which shall be true and correct in all
material respects as of such date).

     (l) No Material Dispute. There shall be no material dispute that is
reasonably likely to impair the ability of the Borrower to repay the Senior
Loans or construct or operate the Business at the production volumes and cost
levels and in the manner contemplated by the current Mine Plan with respect to
the mining rights, rights of way, easements or surface interests relating to the
mining property, water rights or other material rights necessary for the
construction and development of the Sulfide Project or for the operation of the
Business until the Final Maturity Date (it being understood that an assertion or
determination that certain benefits of the Stability Agreement do not


                                       26



apply to parts of the operations of the Borrower will not be treated as a
material dispute that could cause this condition not to be satisfied).

     (m) No Judgment, Decree, Order, Action or Proceeding. There are no actions,
suits or proceedings pending, or, to the knowledge of the Borrower, threatened,
against or affecting the Borrower or any of its assets or properties in any
court, before or by any governmental department, board, agency, administrator or
instrumentality or before any arbitrator, and no existing default by the
Borrower under any applicable order, writ, injunction or decree or other
decision of any court, governmental department, board, agency, administrator or
instrumentality or any arbitrator, in each case that could reasonably be
expected to have a Material Adverse Effect, other than as disclosed in writing
to the Senior Facility Lenders on or prior to the date hereof.

     (n) Officer Certificates. The Administrative Agent shall have received a
certificate from an Authorized Officer of the Borrower as to the matters set
forth in paragraphs (f), (j) (as to the insurance policies required in Appendix
II being in full force and effect), (k), (l), (m), (o), (p), (q), (r) and (s).

     (o) Use of Proceeds. The Borrower shall certify that the proceeds of such
disbursement shall be used solely for financing Project Costs expected by the
Borrower to become due and payable within 90 days after the date of such
disbursement.

     (p) Completion Guarantee. The Completion Guarantee shall remain in full
force and effect on the date of such disbursement.

     (q) No Completion Guarantee Acceleration Event.

          (i) No Completion Guarantee Acceleration Event shall have occurred
     with respect to PDC, or, if such a Completion Guarantee Acceleration Event
     has occurred, a company, whose long term unsecured debt obligations are
     rated at least BBB+ by Standard & Poor's or Baa1 by Moody's and whose Net
     Worth is at least equal to U.S.$1,500,000,000 and which, in the reasonable
     judgment of the Majority Facility Lenders, is a mining company of
     recognized international standing capable of operating the Business (an
     "Acceptable PD Replacement"), has (i) assumed the management obligations of
     Operator pursuant to the Operator's Agreement, (ii) assumed the financial
     obligations of PDC pursuant to the Completion Guarantee, and (iii) assumed
     the obligations to purchase Borrower's production of Concentrate and
     Cathodes pursuant to the terms of the PD Concentrate Sales Agreement and
     the PD Cathodes Sales Agreement, in a manner and pursuant to documentation
     reasonably acceptable to the Majority Facility Lenders;

          (ii) No Completion Guarantee Acceleration Event shall have occurred
     with respect to any of the Sumitomo Parent Companies or, if such a
     Completion


                                       27



     Guarantee Acceleration Event has occurred, the Non-Accelerated Parent
     Companies (not including any of the Sumitomo Parent Companies) shall have
     increased their exposure under the Completion Guarantee (with PDC
     participating in such increase at least on a pro rata basis) or the Senior
     Facility Lenders shall have otherwise been provided with one or several
     Acceptable Credit Support Instruments (which may be provided on a several
     basis), in each case, to cover the Accelerated Parent Company's financial
     obligations pursuant to the Completion Guarantee that relate to Advances
     made subsequent to the occurrence of the Completion Guarantee Acceleration
     Event; and

          (iii) No Completion Guarantee Acceleration Event shall have occurred
     with respect to BVN or, if such a Completion Guarantee Acceleration Event
     has occurred, either (i) the Non-Accelerated Parent Companies have
     increased their exposure under the Completion Guarantee (with PDC
     participating in such increase at least on a pro rata basis) or the Senior
     Facility Lenders shall have otherwise been provided with one or several
     Acceptable Credit Support Instruments (which may be provided on a several
     basis), in each case, to cover BVN's obligations under the Completion
     Guarantee that relate to both past and future Advances (without giving
     effect to the acceleration of BVN's obligations under the Completion
     Guarantee as a result of the Completion Guarantee Acceleration Event), (ii)
     BVN has paid all of its accelerated obligations under the Completion
     Guarantee, (iii) Full Completion is achieved, or (iv) following the
     occurrence of such a Completion Guarantee Acceleration Event as defined in
     clause (ii) of the definition thereof, a determination is made by a
     reputable independent public accountant of international standing that the
     Net Worth of BVN exceeds U.S.$660 million.

     (r) No Borrower Default. No unremedied MPA Default or MPA Event of Default
shall have occurred and be Continuing on the date of such disbursement.

     (s) No Political Force Majeure. No Event of Political Force Majeure has
been declared either by the Parent Companies in accordance with Section 5.01 of
the Completion Guarantee or by the applicable Senior Facility Lenders in
accordance with Section 11.01, and in each case is Continuing on the date of
such disbursement.

     (t) Payment of All Fees and Expenses. The Borrower shall have paid to each
Senior Facility Lender and the Appointed Parties all reasonable fees and
expenses that are due and payable prior to or on the Closing Date pursuant to
the terms of this Agreement or the Senior Facility Loan Agreement to which such
Senior Facility Lender is a party.

     (u) Delivery of Notices of Borrowing. The Borrower shall have delivered a
Notice of Borrowing as contemplated in Sections 2.04 and 2.05.


                                       28



     (v) Acceptance of Appointment of Agent for Service. CT Corporation shall
have accepted its appointment as agent for service of process in accordance with
Section 12.16(b).

     (w) Hermes Guarantee. The Hermes Guarantee shall have been issued.

     (x) Completion. The Parent Companies shall not have declared, in accordance
with Section 3.01 of the Completion Guarantee, that it is commercially
unreasonable to cause the Borrower to attempt to achieve Partial Completion.

     (y) Pagares. The Borrower shall have complied with its obligations under
Section 2.08(a) above.

     5.02 Conditions Precedent to Initial Disbursements of Stand-By Advances and
to Subsequent Advances. The obligation of each Senior Facility Lender to make
the initial disbursement of a Stand-By Advance, any disbursement of a Base
Advance (other than the initial disbursement thereof) and any subsequent
disbursement of a Stand-By Advance from time to time is subject to satisfaction,
or waiver by the Administrative Agent (acting pursuant to instructions from each
Senior Facility Lender), immediately prior to the making of such disbursement,
of the following conditions precedent:

          (a) The conditions precedent set forth in Section 5.01(o), Section
     5.01(p), Section 5.01(q), Section 5.01(r), Section 5.01(s), Section 5.01(x)
     and Section 5.01(y).

          (b) With respect to, and only with respect to, the initial
     disbursement of a Stand-By Advance, the Borrower shall have drawn Base
     Advances from the Senior Facility Lenders up to their respective Base
     Committed Amounts.

     5.03 Satisfaction of Conditions Precedent. With respect to the initial
disbursement of a Stand-By Advance, any disbursement of a Base Advance (other
than the initial disbursement thereof) and any subsequent disbursement of a
Stand-By Advance, for the purpose of Section 5.02(a) the conditions precedent
set forth in Section 5.01(q) subclauses (ii) and (iii), Section 5.01(r) and
Section 5.01(s) shall be satisfied unless the Administrative Agent acting
pursuant to a Supermajority Facility Vote notifies the Borrower in writing that
any such condition is not satisfied on or prior to the Disbursement Date for the
disbursement of such Advance.

                                   ARTICLE VI

                         REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to each Senior Facility Lender, as of
the date hereof and as of the Closing Date (other than representations and
warranties which


                                       29



by their terms are expressly limited to the date of this Agreement or any other
particular date, which shall be true and correct as of such date), that:

     6.01 Organization, Authority, Binding Effect. The Borrower is a sociedad
anonima abierta duly incorporated, validly existing and in good standing under
the laws of the Republic of Peru. The Borrower has the corporate power and
authority to enter into and perform this Agreement and each other Closing
Document and to carry out the transactions contemplated hereby and thereby; the
execution and delivery of this Agreement and each other Closing Document and the
consummation of the transactions contemplated hereby and thereby have been or
will have been duly authorized by all necessary corporate action on the part of
the Borrower; this Agreement has been, and, on the Closing Date, each other
Closing Document will have been, duly executed and delivered by a duly
authorized officer of Borrower; and this Agreement constitutes, and, on the
Closing Date, each other Closing Document will constitute, the valid, legal and
binding obligation of the Borrower, in each case enforceable in accordance with
their respective terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the rights and remedies of creditors or parties to executory contracts
generally and by equitable principles of general applicability.

     6.02 Capitalization. At the date hereof, the authorized, issued and
outstanding capital stock of the Borrower consists solely of 350,056,012 duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
divided as set forth in Schedule 6.02. Except as contemplated by Peruvian law or
the Shareholders Agreement or the Security Documents, (i) there will not be any
shares of capital stock or other securities of the Borrower subject to any
outstanding subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or other instruments outstanding or in effect
giving any Person the right to acquire from the Borrower any shares of capital
stock or other securities of the Borrower and (ii) the Borrower will not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the shareholders of the Borrower on any matter.

     6.03 Compliance with Other Instruments and Laws.

     (a) Neither the execution and delivery of this Agreement or any of the
Closing Documents, nor the consummation of the transactions contemplated hereby
or thereby, will result in any violation of or be in conflict with, constitute a
default under, or result in the creation of any lien, charge or encumbrance upon
any property of the Borrower pursuant to any provision of the organizational
documents of the Borrower.

     (b) Neither the execution and delivery of this Agreement or any of the
Closing Documents, nor the consummation of the transactions contemplated hereby
or thereby, will result in any material violation of or be in material conflict
with, constitute a


                                       30



material default under, or result in the creation of any lien, charge or
encumbrance upon any material property of the Borrower pursuant to any provision
of any agreement, instrument, judgment, decree, order, law or regulation
applicable to the Borrower or any of its properties.

     (c) Except as disclosed in Schedule 6.03(c), the Borrower is in material
compliance with all such provisions, agreements, instruments, judgments,
decrees, orders, laws or regulations applicable to the Borrower or any of its
properties except for any that the Borrower is disputing in good faith by
appropriate proceedings and for which the Borrower has set aside adequate
accounting reserves in accordance with United States GAAP.

     (d) Schedule 6.03(d) sets forth each Peruvian Governmental Approval which
is necessary under applicable laws and regulations in connection with the
transactions contemplated by the Financing Documents and the Project Documents,
including any environmental regulatory permits and approvals necessary to
commence and conduct construction and to operate the Sulfide Project and the
Current Operations, but excepting routine and non-material approvals and
authorizations (each, a "Core Peruvian Governmental Approval").

     (e) (i) The Borrower has obtained, and is in compliance with all of the
terms and requirements of, each Core Peruvian Governmental Approval listed as
having been made or obtained on Schedule 6.03(d) and (ii) all such Core Peruvian
Governmental Approvals are in full force and effect.

     (f) Except as set forth in Schedule 6.03(d), the Borrower has no current
reason to believe that any Core Peruvian Governmental Approval listed in Part II
of Schedule 6.03(d) which has not been made or obtained will not be timely made
or obtained in order to complete construction of the Sulfide Project.

     6.04 Environmental Matters. Except as disclosed in Schedule 6.04, (x) the
Borrower is in compliance in all material respects with all Applicable
Environmental Laws, (y) there is no action, suit, judicial or administrative
proceeding or investigation pending or, to the best knowledge of the Borrower,
threatened against or affecting the Borrower or its assets due to, or related
to, the Borrower's failure to comply with any Applicable Environmental Laws and
(z) the Borrower is not currently subject to any outstanding and unpaid fines or
sanctions related to non-compliance with Environmental Laws.

     6.05 Taxes. Except as disclosed in Schedule 6.05 and except for taxes being
contested in good faith by appropriate proceedings and for which the Borrower
has set aside adequate accounting reserves in accordance with United States
GAAP, the Borrower has filed or caused to be filed all tax returns required to
be filed by it, and has paid all taxes shown to be due and payable on such
returns, or on any assessments made


                                       31



against it or any of its properties by written notice, and all other taxes,
assessments, fees, liabilities or other charges imposed on it or on its
properties by applicable laws or regulations, except where such failure to file
or pay, in any case or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect.

     6.06 Labor Matters. Except as disclosed in Schedule 6.06, the Borrower is
in material compliance with all applicable laws and regulations relating to
labor, industrial relations and the employment of its employees.

     6.07 Legal Proceedings.

     (a) There is no action, suit, proceeding or investigation, at law or in
equity, or before any Governmental Authority or other Person, pending or, to the
best knowledge of the Borrower, threatened, against or affecting the Borrower or
its assets that (i) questions the validity of any of the Closing Documents or
any action taken or to be taken pursuant hereto or thereto, or (ii) in any case
or in the aggregate would reasonably be expected to result in a Material Adverse
Effect.

     (b) Except as set forth on Schedule 6.07, (i) as of the date hereof there
is and, as of the Closing Date, there will be no actions, suits, proceedings or
investigations, at law or in equity, or before any Governmental Authority or
other Person, pending or, to the best knowledge of the Borrower, threatened, in
which the Borrower's claim to the Concessions is or would be challenged, (ii) as
of the date hereof there is and, as of the Closing Date, there will be no
actions, suits or proceedings, at law or in equity, initiated by the Borrower
relating to the Concessions, and (iii) to the best knowledge of the Borrower, as
of the date hereof there is and, as of the Closing Date, there will be no
competing existing claims to the Concessions reported in El Peruano within the
twelve month period immediately preceding the date of this Agreement or
registered in the Book of Mining Rights of the Public Records Office, except, in
the case of any such actions, suits, proceedings, investigations or competing
existing claims that relate to a Concession that is not a Core Mining
Concession, for any such actions, suits, proceedings, investigations or
competing existing claims that individually or in the aggregate would not
reasonably be expected to result in a Material Adverse Effect.

     6.08 Consents, etc. Except as set forth on Schedule 6.08, neither the
execution or delivery by the Borrower of this Agreement or any of the Closing
Documents nor the consummation or performance by the Borrower of the
transactions provided for hereby or thereby is subject to any requirement that
the Borrower obtain any consent, approval or authorization of, or make any
declaration or filing with, any third party that is not a Governmental
Authority, except where the failure to obtain such consent, approval or
authorization or to make such declaration or filing, would not reasonably be
expected to materially impair the consummation or performance of the
transactions contemplated by the Transaction Documents.


                                       32



     6.09 Financial Statements.

     (a) Attached as Schedule 6.09 to this Agreement are the audited financial
statements for the twelve months ended December 31, 2004 of the Borrower (the
"Financial Statements"). The Financial Statements fairly present, in all
material respects, the financial condition of the Borrower and the results of
operations and changes in financial position as of that date and for the
twelve-month period ended December 31, 2004 and have been prepared according to
Peruvian GAAP, consistently applied throughout the periods reported on therein.
There are no material off-balance sheet transactions, arrangements, obligations
or relationships attributable to the Borrower's business or to which the
Borrower is a party.

     (b) The financial statements of the Borrower for the period ended June 30,
2005 are true, complete and correct and fairly present in all material respects
the financial condition of the Borrower as of the date thereof, all in
accordance with CONASEV requirements (subject to normal year-end adjustments).
Except as otherwise disclosed to the Senior Facility Lenders in writing prior to
the date hereof, since the date of such financial statements there has been no
material adverse change in the Borrower's financial condition.

     6.10 No Broker. Except for Citigroup Global Markets Inc., no broker,
finder, agent or other intermediary has been engaged by the Borrower in
connection with the negotiation of any of the Financing Documents or the
consummation of the transactions contemplated herein or therein.

     6.11 Absence of Undisclosed Liabilities. The Borrower has not incurred any
liabilities or obligations that would be required to be reflected or reserved
against in a balance sheet prepared in accordance with Peruvian GAAP in a manner
consistent with the Financial Statements except for (i) liabilities or
obligations reflected or reserved against in the Financial Statements or in the
financial statements of Borrower referred to in Section 6.09(b) or (ii)
liabilities, including liabilities incurred in the ordinary course of business
since December 31, 2004 that, in any case or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.

     6.12 Absence of Certain Changes and Events. Except for the Special
Dividend, the Capital Increase and the actions contemplated in this Agreement,
and except as set forth in Schedule 6.12, since December 31, 2004 (x) the
Borrower has conducted its business in the ordinary course, including the
actions contemplated in the Feasibility Study, and has not suffered any Material
Adverse Effect, and (y) to the best knowledge of the Borrower, no event or
condition is threatened that, individually or in the aggregate, has had or would
reasonably be expected to have, a Material Adverse Effect.

     6.13 Mining and Beneficiation Concessions and Other Rights. Except as set
forth in Schedule 6.13 or as would not, in any case or in the aggregate,
reasonably be


                                       33



expected to result in a Material Adverse Effect, the Borrower has full and
sufficient rights to use the Core Mining Concessions, water rights and surface
lands necessary for the Business as currently conducted and, with respect to the
Sulfide Project, as described in Schedule D. Except as would not, in any case or
in the aggregate, reasonably be expected to result in a Material Adverse Effect,
or as disclosed in Schedule 6.13, the real property not owned by Borrower is
currently subject to all easements, rights of way and utilities services that
are necessary for the operation of the Business as currently conducted thereon
and with respect to the Sulfide Project, anticipated to be conducted by the
Feasibility Study.

     6.14 Related Party Transactions and Commitments. Schedule 6.14 sets forth a
true, complete and correct list as of the date hereof of all related party
transactions, contracts and commitments between the Borrower and its Affiliates
involving continuing liabilities and obligations in excess of U.S.$50,000 per
year, including an indication of which transactions, contracts and commitments
will continue following the Closing Date.

     6.15 Project Information.

     (a) There are no facts or circumstances known to the Borrower which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and which have not been disclosed to the Senior Facility
Lenders.

     (b) The financial projections contained in the Information Memorandum,
dated April 7, 2005 taken as a whole, have been prepared in good faith based on
assumptions that the Borrower believed to be reasonable at the time such
projections were made (it being understood by the MPA Parties that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Borrower, and that no assurances can be
given that such projections will be realized).

     (c) There are no facts known to the Borrower that cause it to believe that
the conclusions regarding reserve estimates contained in Section 3 of the
Feasibility Study are inaccurate in any materially adverse way. There are no
facts known to the Borrower that cause it to believe that the procedures used to
determine the minable reserve estimates contained in Section 3 of the
Feasibility Study were not conducted in accordance with established engineering
principles and practices.

     (d) No representation or warranty is or shall be deemed made in this
Section as to what the dates of Start-up of Commercial Production or the
Completion Release Date, final capital costs, actual operating costs of the
Sulfide Project, copper or other metal prices, exchange or interest rates, rates
of inflation, transportation, the Sulfide Project's actual rate of production or
the actual cash flows or actual financial results to be achieved by the Sulfide
Project will turn out to be.


                                       34



     (e) The representations and warranties in this Section 6.15(b), (c) and (d)
are made only as of the date of this Agreement and are not made at any other
time.

     6.16 Ranking. The obligations of the Borrower under each Senior Facility
Loan Agreement, the Senior Facility Loans made thereunder and any Promissory
Notes evidencing such Senior Facility Loans and, if and when issued, the
Peruvian Bonds, will at all times rank in right of payment and of collateral
security (i) pari passu with the Borrower's obligations under each other Senior
Loan Agreement, the Senior Loans made thereunder and any Promissory Notes
evidencing such Senior Loans, (ii) senior to the obligations of the Borrower in
respect of the Subordinated Debt and (iii) pari passu in right of payment with
or senior in right of payment to, and senior in right of collateral security
(other than Permitted Liens) to, all other obligations of the Borrower other
than those which have priority under applicable Peruvian law.

     6.17 No MPA Event of Default or MPA Default. No MPA Event of Default or MPA
Default has occurred and is Continuing.

     6.18 Copies of Documents. The copies of the Senior Facility Loan
Agreements, Security Documents and Project Documents and of any amendments to
any of the foregoing provided or to be provided by the Borrower to each Senior
Facility Lender prior to or on the Closing Date are, or when delivered will be,
true and complete copies of such agreements.

     6.19 Property and Assets. The Borrower owns no property or asset of a
material value that is not used for, related to, or incidental to the Current
Operations or the Sulfide Project.

     6.20 No Immunity. Neither the Borrower nor any of the Project Property has
any immunity from jurisdiction of any court or from any legal process (whether
through service, notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise).

     6.21 Stability Agreement. The Stability Agreement is in full force and
effect.

     6.22 Description of the Sulfide Project. At the date hereof and the Closing
Date, the description of the Sulfide Project in Schedule D conforms in all
material respects to the Borrower's current plans for construction of the
Sulfide Project.

     6.23 Water Rights, etc. The Borrower has obtained, or has no current reason
to believe that it will not timely obtain as and when necessary for construction
and operation of the Sulfide Project, all water rights, easements, leases,
rights of way and other real property, licenses or rights that are materially
necessary in order to conduct the Current Operations and construct and operate
the Sulfide Project.


                                       35



     6.24 Tax Liability. Except as set forth on Schedule 6.24 and to the best
knowledge of the Borrower, amounts payable by the Borrower to any Senior
Facility Lender in respect of any obligation under the Financing Documents will
not be subject by any Governmental Authority of Peru to any Tax.

                                   ARTICLE VII

                                    COVENANTS

     7.01 Maintenance of Existence. The Borrower shall do all things necessary
to maintain the Borrower in existence as a sociedad anonima abierta under the
laws of Peru.

     7.02 Books, Records and Accounts.

     (a) The Borrower shall:

          (i) keep proper books of record and account in which entries will be
     made of transactions of or in relation to the Business; and

          (ii) keep accounts and financial and cost records in accordance with
     United States GAAP (or, alternatively, prepared in accordance with Peruvian
     GAAP and containing a reconciliation to United States GAAP), provided that
     the Borrower may also keep, for purposes other than compliance with this
     Agreement, accounts and records in accordance with Peruvian GAAP or as
     otherwise required by applicable law.

     (b) The Borrower shall (i) within 90 days from the Closing Date close all
accounts other than the Accounts and shall not open any account other than the
Accounts and (ii) promptly after the Closing Date and in any event within 90
days from the Closing Date, instruct all Buyers to make payments owed to
Borrower to the Accounts in the manner contemplated under the Master Security
Agreement.

     7.03 Principal Place of Business. The Borrower shall not change its
jurisdiction of incorporation, shall have its principal place of business and
chief executive office solely in Peru and shall maintain in such place originals
or copies of the principal books and records relating to its business. Other
books and records relating to the Sulfide Project and the Current Operations
shall be maintained at the offices of the Operator in Peru.

     7.04 Use of Proceeds. The Borrower shall use the proceeds of the Senior
Loans solely for the payment of Project Costs, provided that the Borrower may
use the proceeds of the issuance of the Peruvian Bonds (if any) to prepay the
Stand-By Advances of the Commercial Banks.


                                       36



     7.05 Information. The Borrower shall furnish to the Administrative Agent
(in hard copy or by electronic means):

          (a) Construction Progress Reports. As soon as available but in no
     event more than 30 days after the end of each calendar quarter ending prior
     to the Completion Release Date, a summary of construction of the Sulfide
     Project during such quarter, which shall contain the following information:
     (i) construction during such quarter, including physical progress and
     expenditure, (ii) cumulative expenditure through the end of such quarter,
     (iii) material variations of such physical progress and cumulative
     expenditures from those set forth in the budget, (iv) the Borrower's then
     current estimate of the aggregate costs required to achieve Full Completion
     and the anticipated date of Start-Up of Commercial Production, (v) the
     Borrower's then current estimates of the material variations of such costs
     and timing from those set forth in the budget, (vi) description of
     "critical path" items for the then current quarter, (vii) any staff
     employed variation for such quarter and (viii) a safety report setting
     forth the accident rate and safety training for such quarter;

          (b) Annual Budget. An annual budget and operating plan (approved by
     the Borrower's board of directors) having substantially the same scope and
     detail as in the form attached as Appendix III, provided that any major
     changes from the form shall be explained in a footnote to the plan (the
     "Annual Budget"), promptly upon approval by the Borrower's board of
     directors but in any event prior to the commencement of each fiscal year to
     which it relates. Each Annual Budget shall include estimates of revenues
     and costs (stating separately Operating Costs and payments of Senior Loans
     Obligations) for each month of such fiscal year and the Borrower's
     statement of budgeted cash flows. Each Annual Budget (including any
     amendment or material change thereto) shall be based upon and fairly
     reflect the Mining Plan then in effect. The Borrower may amend the Annual
     Budget at any time and from time to time without consent or approval by any
     Senior Lender or the Administrative Agent. The Borrower shall promptly
     furnish to the Administrative Agent (for delivery to each Senior Lender)
     any revisions to the Annual Budget when made;

          (c) Operating Reports. Not later than 45 days after the end of each
     calendar quarter with respect to fiscal quarters ending after the
     Completion Release Date, a summary of operations during such quarter,
     including information in reasonable detail concerning (i) Operating Costs
     during such quarter as compared to the Annual Budget last delivered to
     Senior Facility Lenders, (ii) capital expenditures during such quarter as
     compared to the Annual Budget last delivered to Senior Facility Lenders,
     (iii) production from the Current Operations and the Sulfide Project and
     inventory during such quarter and (iv) any material developments during
     such quarter in the operations of the Business;


                                       37



          (d) Quarterly/Semi-Annual Financial Statements. As soon as available
     but in no event more than 45 days after the end of each of the first three
     fiscal quarters of each fiscal year of the Borrower, financial statements
     of the Borrower consisting of an unaudited balance sheet of the Borrower as
     of the close of such quarter and unaudited statements of income and expense
     and changes in financial position from the beginning of the then-current
     fiscal year to the close of such quarter, prepared in accordance with
     United States GAAP (or, alternatively, prepared in accordance with Peruvian
     GAAP and containing a reconciliation to United States GAAP), certified by
     an Authorized Officer of the Borrower;

          (e) Annual Financial Statements. As soon as available but in no event
     more than 120 days after the end of each fiscal year of the Borrower,
     audited financial statements of the Borrower consisting of a balance sheet
     as of the end of such fiscal year and a statement of income and expense and
     changes in financial position for such fiscal year, prepared in accordance
     with United States GAAP (or, alternatively, prepared in accordance with
     Peruvian GAAP and containing a reconciliation to United States GAAP)
     certified by the Independent Public Accountants;

          (f) Debt Service Coverage Ratio. No later than 45 days after the end
     of each Calculation Period occurring on and after the first Payment Date, a
     certificate from an Authorized Officer of the Borrower, substantially in
     the form attached hereto as Exhibit E, certifying the calculation, set
     forth in reasonable detail, of the Debt Service Coverage Ratio with respect
     to such Calculation Period;

          (g) Other Events. As soon as practical, a report pertaining to: (i)
     any other development, event or circumstance relating to the Current
     Operations or in the construction or operation of the Sulfide Project which
     could reasonably be expected to materially and adversely affect the Current
     Operations or the Borrower's rights in the Sulfide Project, or the
     Borrower's rights in the Project Property, taken as a whole, security
     interests granted or purported to be granted by or pursuant to any Security
     Document, taken as a whole, the ability of the Borrower to achieve Full
     Completion or Partial Completion by the Target Completion Date or to pay
     Senior Facility Loans Obligations when due; or (ii) any other event that
     could reasonably be expected to materially increase the total capital cost
     of the Sulfide Project or have a Material Adverse Project Effect, in each
     case describing the nature thereof and the action the Borrower proposes to
     take with respect thereto;

          (h) Reporting to the Peruvian Bondholders. Borrower shall provide the
     Administrative Agent with a copy of all information provided to the
     Peruvian Bondholders pursuant to the Indenture (which shall not include
     information that


                                       38



     qualifies as "reserved information" and is disclosed as such to CONASEV) at
     the same time as such information is provided to the Common Representative;
     and

          (i) Monthly Construction Reports. If the Parent Companies declare, in
     accordance with Section 3.01 of the Completion Guarantee that it is
     commercially unreasonable to cause the Borrower to attempt to achieve
     Partial Completion, then the Borrower shall be required to provide the
     Administrative Agent with copies of each monthly construction report
     received by Borrower under the Construction Agreement since the date hereof
     and to be received after the date of such declaration.

     7.06 Confirmation of Progress of Construction. Prior to the Completion
Release Date, once every calendar year as well as in connection with the
Completion Release Date, the Administrative Agent (acting upon instructions from
the Majority Facility Lenders) shall have the right to request the Independent
Engineer at the cost and expense of the Borrower to confirm the progress of
construction of the Sulfide Project and the Borrower shall permit the
Independent Engineer to visit and inspect the Sulfide Project for such purpose;
provided that the provisions of Section 12.10 hereof shall apply to all
information acquired pursuant to this Section 7.06. The Borrower shall offer all
reasonable assistance to the Independent Engineer in connection with any such
visit and inspection.

     7.07 Preservation of Assets.

     (a) The Borrower shall maintain the facilities necessary for the operation
of the Sulfide Project and its Current Operations in good repair in accordance
with good industry mining practice and as required to maintain production in
accordance with Section 7.09.

     (b) The Borrower shall not sell, transfer or otherwise dispose of Project
Property except for (i) disposition of production, (ii) disposition of assets in
the ordinary course of business, (iii) disposition of obsolete assets, (iv)
disposition of assets in compliance with any order from a Governmental
Authority, (v) disposition of assets no longer used for the Business, (vi)
disposition of assets replaced or that are being replaced within 60 days of
disposition with similar productive property, (vii) disposition of assets not
contemplated in subparagraphs (i) to (vi) the fair value of which, individually
or in the aggregate within a given calendar year, does not exceed US$10 million
or (viii) any other disposition of assets unless the Administrative Agent acting
upon instructions from the Majority Facility Lenders objects to such disposition
in writing within 15 Business Days of receipt of written notice from the
Borrower specifying the assets proposed to be sold or transferred, the value
thereof and the rationale for such sale or transfer; provided, however, that in
no event shall the Borrower sell or transfer Non-Replaceable Property.


                                       39



     7.08 Mining Concessions.

     (a) The Borrower shall keep the Core Mining Concessions in full force and
effect, shall pay all fees and other payments payable in connection with the
continuation therewith, and shall defend its right, title and interest in, to
and under the Core Mining Concessions against any adverse or competing claim.

     (b) The Borrower shall keep the Mining Concessions that are not Core Mining
Concessions in full force and effect, shall pay all fees and other payments
payable in connection with the continuation therewith, and shall defend its
right, title and interest in, to and under such Mining Concessions against any
adverse or competing claim, except to the extent that the failure of such Mining
Concession to be in full force and effect or the failure of the Borrower to
defend its right, title and interest in, to and under such Mining Concessions
against any adverse or competing claim would not be reasonably likely to have a
Material Adverse Effect.

     7.09 Minimum Production. Following the Completion Release Date, the
Borrower will undertake to use best efforts to produce annually until the
then-scheduled final maturity of the Senior Loans (i) 410,000 Dry Metric Tonnes
of Concentrate, and (ii) up to (and including) the year 2014, 108.5 million
pounds of Cathodes, provided, in each case, that:

          (a) upon exercise by the Parent Companies of the Debt Buy-Down Option,
     such production targets will be reduced to such amounts, which taking into
     account the reduced debt amount, would result in a minimum Annual DSCR
     equal to 1.0X (calculated pursuant to the methodology set forth in the
     first five bullets of Schedule A to the Completion Guarantee);

          (b) the Borrower shall have the right to suspend or curtail production
     due to engineering maintenance, similar technical reasons or Labor Unrest;
     and

          (c) to satisfy the above covenant, the Borrower shall not be required
     to expand the design capacity of the mine and related facilities or make
     capital expenditures other than those for capital spares, maintenance and
     replacements.

     7.10 Offtake Agreements.

     (a) The Borrower (i) shall not breach, (ii) shall maintain in full force
and effect to the extent within its power to do so, and (iii) shall comply, in
all material respects with, its obligations under the Offtake Agreements, in
each case, until the Final Maturity Date.

     (b) The Borrower shall promptly (and in any event within 5 Business Days of
the same) notify the Administrative Agent of (i) the termination of any of the
Offtake


                                       40



Agreements prior to the Final Maturity Date, (ii) any material default by any of
the counterparties thereunder, (iii) any party thereto failing to perform any
material obligation thereunder that it would have been obligated to perform but
for the occurrence of Force Majeure, to the extent that Force Majeure excuses
performance thereunder, (iv) a failure, upon any periodic renegotiation of
pricing provisions, payment and calculation provisions, to establish a price or
payment and calculation provisions in accordance with the applicable Offtake
Agreement, (v) a suspension by any buyer of its obligations thereunder, (vi) the
annual pricing provisions, payment and calculation provisions, to the extent
such provisions vary in any material respect from the corresponding provisions
in effect with respect to the prior year and (vii) in the case of year in which
buyer's obligations are suspended, the terms for sale to alternate purchasers,
if any.

     (c) Following the termination of any Offtake Agreement for any reason
whatsoever, the Borrower shall use commercially reasonable efforts to promptly
enter into a replacement contract at then current market price and for similar
quantities and duration with a counterparty that qualifies as an Acceptable
Guarantor or with a Parent Company or an Affiliate of a Parent Company within 90
days of the effective date of termination of such Offtake Agreement.

     7.11 Sale of Concentrate and Cathodes. The Borrower shall sell (i) the
volumes of Concentrate and Cathodes, as the case may be, covered in the Offtake
Agreements at the prices stipulated therein, and (ii) the balance of its
production of Concentrate and Cathodes in U.S.$ at market prices, and shall
cause all proceeds arising from the Offtake Agreements or from other sales of
Concentrate or Cathodes to be paid directly to the Trustee for deposit to the
Proceeds Account or, in the case of Domestic Sales, to the Borrower for deposit
to the Onshore Dollars Account.

     7.12 Project Documents.

     (a) Except with the prior approval of the Administrative Agent (acting
pursuant to a Supermajority Facility Vote), the Borrower shall not assign,
revise, amend, modify, replace or terminate (x) any material Project Document in
circumstances where such assignment, revision, amendment, modification,
replacement or termination is reasonably likely to have a Material Adverse
Lender Effect; or (y) any Identified Material Project Document in circumstances
where such assignment, revision, amendment, modification, replacement or
termination is reasonably likely to have a Material Adverse Project Effect.

     (b) The Borrower shall deliver to the Administrative Agent a copy of any
Project Document that is entered into after the Closing Date and of any
amendment to a Project Document or an Identified Material Project Document, in
each case within 15 Business Days after it becomes effective.


                                       41



     7.13 Power Generation Facility.

     (a) If, at any time, the Borrower has secured Adequate Power Supply
Commitments that in the aggregate are sufficient for the Borrower to operate its
Business for the years 2011 to 2015 ("Sufficient Power Supply Commitments"), the
Borrower shall provide the Senior Facility Lenders with copies of such Adequate
Power Supply Commitments together with a report prepared by the Borrower
describing how such aggregate commitments satisfy power needs for the Business
for such period.

     (b) If, prior to December 15, 2007, the Borrower has not secured Sufficient
Power Supply Commitments:

          (i) the Borrower shall, on or prior to December 31, 2007, prepare a
     budget for work and expenditures required to construct the Power Generation
     Facility (such budget, as updated from time to time in accordance with
     clause (c) below, the "Power Generator Construction Budget"), which shall
     be submitted by the Borrower for review by the Independent Engineer;

          (ii) the Borrower shall initiate, during the year 2008, the activities
     (including placing orders for long lead-time equipment), which, in its
     reasonable judgment, are appropriate to enable the construction of the
     Power Generation Facility during the years 2009 and 2010, so that the Power
     Generation Facility may be completed and operational by the end of the year
     2010.

     (c) In the event that by December 31, 2008 the Borrower has not secured
Sufficient Power Supply Commitments, the Borrower will use commercially
reasonable efforts to (or cause a third party contractor to) construct the Power
Generation Facility in compliance with the covenant on environmental compliance
set forth in Section 7.23.

     (d) After December 31, 2007, the Borrower shall update from time to time
the Power Generator Construction Budget so that such budget reflects at all
times the remaining amounts to be spent for work and expenditures required to
construct the Power Generation Facility, taking into account the then current
market prices for such work and expenditures and all progress of construction.

     (e) The Borrower shall be released from its obligations under this Section
7.13 as soon as the Borrower shall have secured Sufficient Power Supply
Commitments to operate its Business.

     7.14 Taxes. The Borrower shall pay and discharge, before the same shall
become delinquent, all Taxes, assessments and governmental charges or levies
lawfully imposed on it or its Property (including interest and penalties) unless
such Taxes, assessments, charges or levies shall be contested in good faith and
by appropriate


                                       42



proceedings and adequate accounting reserves are established in accordance with
United States GAAP with respect thereto.

     7.15 Sulfide Project, Capital Expenditures. The Borrower shall not incur or
expend Incremental Capital Expenditures or Ancillary Capital Expenditures,
unless in its judgment such Incremental Capital Expenditures ("Permitted
Incremental Capital Expenditures") or Ancillary Capital Expenditures ("Permitted
Ancillary Capital Expenditures"), as the case may be, will not have a Material
Adverse Effect.

     7.16 Limitation on Debt. The Borrower shall not create, incur, assume or
suffer to exist any Indebtedness other than the following Indebtedness
(collectively, "Permitted Indebtedness"):

          (a) Senior Loans, including Senior Facility Loans incurred under
     Replacement Loan Agreements in the circumstances contemplated in Section
     3.10(b);

          (b) Subordinated Loans provided and held by the Parent Companies or
     their respective Affiliates that are unsecured and pledged at all times to
     secure the Senior Loans;

          (c) Working Capital Debt in an amount not to exceed, at any time,
     U.S.$75,000,000 or its Equivalent;

          (d) reimbursement obligations with respect to unsecured import letters
     of credit in favor of sellers of equipment necessary for the Business or
     constituting Sustaining Capital Costs or Incremental Capital Expenditures
     which by their terms expire not more than 18 months following the issuance
     thereof;

          (e) trade accounts payable arising in the ordinary course of business
     which are payable less than 181 days after the date the respective goods
     are delivered or the respective services are rendered;

          (f) Replacement Debt in connection with a prepayment in full of all
     outstanding Senior Facility Loans;

          (g) Permitted Hedges; and

          (h) financial assurances, including surety bonds or reimbursement
     obligations in respect of letters of credit, which are required by the
     Closure Law and which do not exceed in the aggregate U.S.$50,000,000 or its
     Equivalent.

     Nothing in this Section 7.16 or elsewhere in this Agreement or any other
Financing Document shall be deemed to prohibit the exercise by the Borrower of
any right under any Sales Agreement to elect to receive payment for the products
sold


                                       43



thereunder in advance of the time at which payment is otherwise required to be
made thereunder, which advance payment may require payment (or deduction) of a
finance charge, so long as (i) products sold under such arrangements are sold
not more than 3 months in advance of shipment and represent not more than 30% of
Borrower's annual production of such products and (ii) the proceeds of such
arrangements are used for working capital purposes.

     7.17 Limitation on Liens. The Borrower shall not create, assume or suffer
to exist any Lien upon any of its Property, assets or contractual rights in each
case whether now owned or hereafter acquired, except for the following Liens
(collectively, "Permitted Liens"):

          (a) Liens imposed by any Governmental Authority for taxes not yet due
     or which are being contested in good faith and by appropriate proceedings
     (and against which adequate accounting reserves are being maintained in
     accordance with United States GAAP);

          (b) Liens for customs duties, relating to imported assets, owed by the
     Borrower that have been deferred in accordance with Peruvian law;

          (c) deposits or pledges to secure the Borrower's obligations under
     workmen's compensation, social security or similar laws, or under
     unemployment insurance;

          (d) deposits or pledges to secure bids, tenders, contracts (other than
     contracts for the payment of money), leases, statutory obligations, surety
     and appeal bonds, and other obligations of like nature arising in the
     ordinary course of business;

          (e) bankers' liens arising in the ordinary course of the Borrower's
     activities with commercial banks;

          (f) mechanic's, workmen's, materialmen's or other like liens arising
     in the ordinary course of business with respect to obligations which are
     not due or which are being contested in good faith and by appropriate
     proceedings (and against which adequate reserves are being maintained);

          (g) the rights of a buyer of identified goods of the Borrower pursuant
     to Section 2-501 of the Uniform Commercial Code as in effect from time to
     time in the State of New York or any other similar provision of applicable
     law;

          (h) easements (including easements for electric transmission lines)
     and minor imperfections of title on real estate and Concessions (other than
     the Core


                                       44



     Mining Concessions), provided that such imperfections and easements do not
     render title unusable for purposes of the Business;

          (i) Liens on any Property of the Borrower to which the Borrower has
     not consented and which are being contested by the Borrower in good faith
     and by appropriate proceedings or liens imposed by law (and against which
     adequate accounting reserves are being maintained in accordance with United
     States GAAP); and

          (j) Liens created pursuant to the Security Documents or otherwise for
     the benefit of the Senior Lenders, the Onshore Collateral Agent and the
     Offshore Collateral Agent.

     7.18 Drawdowns of Senior Loans. The Borrower shall promptly but in any
event within 5 Business Days notify the Administrative Agent if a request for an
Advance is not honored.

     7.19 Notice of MPA Defaults; Extraordinary Notices. The Borrower shall
promptly but in any event within three Business Days in the case of clauses (i)
and (iii) and with 30 days in all other cases, notify the Administrative Agent
upon its discovery of the occurrence of:

          (i) any MPA Default or MPA Event of Default;

          (ii) any material default by any party under, or termination of, any
     Project Document;

          (iii) any Event of Political Force Majeure;

          (iv) any litigation, arbitration or governmental proceeding that is
     instituted or threatened against the Borrower or, until the Guarantee
     Release Date, the Sponsors, that is reasonably likely to have a Material
     Adverse Effect;

          (v) any material environmental accidents or spill relating to the
     Borrower or its property or operations, or any other condition, event or
     circumstance that results or is reasonably likely to result in material
     non-compliance by the Borrower with any Environmental Laws;

          (vi) notices from Governmental Authorities in respect of any claim
     that could materially affect the Core Mining Concessions;

          (vii) any event or development (other than events or developments that
     are not specific to the Current Operations or the Sulfide Project) known to
     the Borrower that could reasonably be expected to have a Material Adverse
     Effect;


                                       45



          (viii) any event of Force Majeure declared by the Borrower or the
     relevant counterparty under any Project Document; and

          (ix) the acquisition by the Borrower of any Peruvian mining
     concessions necessary to operate the Current Operation or the Sulfide
     Project,

in each case describing the nature thereof and the action the Borrower proposes
to take with respect thereto.

     7.20 Restricted Payments.

     (a) Subject to clauses (b) and (c) below, the Borrower shall not make any
Restricted Payment (x) except by directing the Trustee to make a transfer from
the Restricted Payment Sub-Account and (y) unless on the date such Restricted
Payment is proposed to be made:

          (i) there is, and immediately following the making thereof would be,
     no Continuing MPA Default or MPA Event of Default;

          (ii) there is, and immediately following the making thereof would be,
     no Continuing Event of Political Force Majeure;

          (iii) after giving effect to the Restricted Payment, there is no
     Senior Debt Service Reserve Deficiency, Extraordinary Major Maintenance
     Reserve Deficiency and Power Generator Reserve Deficiency and the credit
     balance of the Senior Debt Accumulation Sub-Account is not less than the
     then applicable Required Senior Debt Accumulation Amount;

          (iv) either (x) the Borrower has not received a Royalty Tax Claim or
     (y) the Borrower is not required in accordance with United States GAAP to
     establish an accounting reserve with respect to such claim, or (z) after
     giving effect to the Restricted Payment, there is no Tax Contingency
     Reserve Deficiency;

          (v) after giving effect to the Restricted Payment, the Borrower has
     sufficient cash in the Proceeds Account (excluding funds credited to the
     Senior Debt Reserve Sub-Account and the Senior Debt Accumulation
     Sub-Account and insurance proceeds credited thereto that are subject to
     Section 3.06(b)), the Onshore Dollars Account and the Onshore Nuevos Soles
     Account to pay Operating Costs for a period of 30 days;

          (vi) the Debt Service Coverage Ratio as of the end of the most recent
     Calculation Period exceeds 1.25X; and


                                       46



          (vii) the Guarantee Release Date has occurred and the first scheduled
     repayment of principal with respect to Senior Loans has been made.

     (b) If each condition set forth in clause (a) above has been satisfied, or
if each condition set forth in subclauses (a)(i), (a)(ii) and (a)(vii) has been
satisfied and the Parent Companies have furnished the Trustee with an Acceptable
Credit Support Instrument in the amount of such Restricted Payment, and the
Borrower wishes to make a Restricted Payment, the Borrower may at any time
instruct the Trustee to transfer the amount of such payment from the Restricted
Payment Sub-Account to the recipients designated by the Borrower in the
certificate described in clause (c) below, and the Senior Facility Lenders shall
so instruct the Trustee.

     (c) At least ten NY Business Days prior to the date on which a Restricted
Payment is proposed to be made, (i) the Borrower shall have delivered to the
Trustee with copy to the Administrative Agent a certificate (a "Restricted
Payment Certificate") of an Authorized Officer of the Borrower stating (x) the
amount and recipient of each such proposed Restricted Payment and (y) that each
condition set forth in subclauses (a)(i) through (a)(vii) above has been
satisfied (setting forth, where applicable, the information and computations
demonstrating compliance with such conditions of paragraph (a) and, in addition,
if subclause (a)(iv) is satisfied by reason of subclause (y) thereof, stating
that the determination that such subclause (y) is satisfied has been made after
consultation with the Borrower's independent auditors) or (ii) the Borrower
shall have delivered to the Trustee and the Administrative Agent a certificate
of an Authorized Officer (a "Partial Restricted Payment Certificate") stating
(x) the amount and recipient of each such proposed Restricted Payment and (y)
that each condition set forth in subclauses (a)(i), (a)(ii) and (a)(vii) has
been satisfied and the Borrower shall have delivered to the Trustee an
Acceptable Credit Support Instrument in the amount of such Restricted Payment.

     7.21 Compliance with Law. The Borrower shall comply in all material
respects with all applicable laws, including required Governmental Approvals,
rules, regulations and orders of Peru and each other applicable jurisdiction,
unless the necessity of compliance therewith is contested in good faith by
appropriate proceedings, and with respect to which adequate accounting reserves
have been established and maintained by the Borrower in accordance with United
States GAAP with respect thereto.

     7.22 Transactions with Affiliates. All transactions between the Borrower
and any of its Affiliates shall be on commercially reasonable terms that are at
least as favorable to the Borrower as those which might be obtained in an
arm's-length transaction with a Person that is not an Affiliate, provided that
the Senior Facility Lenders agree that all Closing Project Documents between the
Borrower and any of its Affiliates (excluding changes thereto or negotiation of
variable provisions thereunder after the date hereof) shall be deemed to meet
the standard in this Section 7.22.


                                       47



     7.23 Environmental Compliance.

     (a) The Borrower shall, and shall cause all other persons occupying the
site of its Business to, in all material respects perform its obligations and
operate its Business in accordance with all Applicable Environmental Laws.

     (b) The Borrower shall provide to the Administrative Agent (i) annually
within 30 days from the anniversary date hereof a report as to environmental
compliance, and (ii) from time to time copies of material documents submitted to
environmental authorities.

     (c) The Borrower shall prepare and submit to the Ministry of Energy and
Mines of the Republic of Peru or to such other relevant Governmental Authority,
as the case may be, no later than December 15, 2005, the Environmental Impact
Assessment Addendum, the Environmental Impact Assessment for the Transmission
Line, and Environmental and Social Management Plan (ESMP), and shall promptly
provide the Administrative Agent a copy of the final documents so submitted as
well as upon receipt of the Governmental Approvals delivered to the Borrower
with respect thereto.

     (d) The Borrower shall, in accordance with all applicable Equator
Principles:

          (i) comply, in all material respects, with its ESMP in the
     construction of the Sulfide Project and in the operation of the Current
     Operations and the Sulfide Project;

          (ii) provide annual reports, prepared by in house staff or third
     parties, on the status of compliance with the ESMP; and

          (iii) where applicable, decommission the facilities in accordance with
     an agreed Closure Plan.

     (e) The Borrower shall:

          (i) generate, use, treat, store, release or dispose of, or permit the
     generation, use, treatment, storage, release, or disposal of Hazardous
     Materials on or in the Project Property; and

          (ii) conduct any investigation, study, sampling and testing and
     undertake any clean-up, removal, remedial or other action necessary to
     remove and clean-up all Hazardous Materials from the Project Property,

in each case in accordance with the requirements of all Applicable Environmental
Laws relating to the treatment, handling and disposal of Hazardous Materials,
except as previously disclosed to the Senior Lenders in writing.


                                       48



     (f) The Borrower shall provide access to the site of the Sulfide Project
and the Current Operations to the Senior Facility Lenders for the purpose of
monitoring compliance with the Equator Principles as contemplated in Section
7.31.

     (g) If any material issue arises as to compliance by the Borrower with its
obligations hereunder, the Borrower and the Administrative Agent shall engage in
discussions in good faith to resolve such issues, provided that if any specific
issue remains unresolved after three months from receipt by the Borrower of
notice from the Administrative Agent, the Administrative Agent (acting upon
instructions from the Majority Facility Lenders) shall have the right to engage
the Independent Engineer to provide a report with respect to such issue.

     7.24 Permitted Hedges. The Borrower shall not enter into any Hedge
Agreements other than Hedge Agreements to hedge against prices and costs arising
in the ordinary course of the Borrower's business and not for speculation
("Permitted Hedges").

     7.25 Ordinary Course Transactions. The Borrower shall not enter into any
material transactions except in the ordinary course of business, on ordinary
commercial terms and on the basis of arms' length arrangements, provided that
neither this covenant nor Section 7.07 shall limit the Borrower's ability to
transfer (including, without limitation, by way of donation) its co-ownership
interest in the Pillones Dam to any third party so long as the water rights of
the Borrower for the Current Operations and the Sulfide Project are unaffected
by such transfer and provided further that the Senior Facility Lenders agree
that transactions undertaken pursuant to any Identified Material Project
Document with a Parent Company shall be deemed to meet the standard in this
Section 7.25.

     7.26 Determination of Extraordinary Major Maintenance Reserve Amount. At
the next meeting of the board of directors of the Borrower following the date of
Start-up of Commercial Production and thereafter annually in connection with the
preparation of the Annual Budget, the board of directors of the Borrower shall
exercise its discretion, acting in a reasonable manner, taking into account all
future anticipated revenues of the Borrower, and subject to their fiduciary
duties, to determine the amount of cash that needs to be reserved in the
Extraordinary Major Maintenance Reserve Sub-Account, if any, to enable the
Borrower to pay anticipated Extraordinary Major Maintenance Expenditures with
respect to the year covered by such Annual Budget (or with respect to the year
during which Start-up of Commercial Production occurs) as and when the same
shall become due and payable (the "Extraordinary Major Maintenance Reserve
Amount").

     7.27 Determination of Tax Contingency Reserve Amount. If the Borrower has
at any time received a claim (a "Royalty Tax Claim") from the Peruvian
authorities asserting that a Royalty Tax is payable with respect to all or part
of its revenues and if the Borrower contests such Royalty Tax Claim, the
Borrower shall, starting on the date of


                                       49



Start-up of Commercial Production, in connection with the preparation of its
quarterly financial statements (i) determine, after consultation with its
independent auditors, whether or not it is required in accordance with United
States GAAP to establish an accounting reserve with respect to such claim, and
(ii) if it so determines, further determine the amount to be reserved in
accordance with United States GAAP on account of such claim. After a final
determination is made, or a settlement is reached, regarding the Royalty Tax
Claim, any Royalty Tax that the Borrower shall be required to pay with respect
to future revenues, in accordance with such determination or settlement, shall
be paid as part of its Operating Costs and the Borrower shall not be required to
reserve such future Royalty Tax.

     7.28 Further Assurances. Subject to the terms and conditions herein
provided, the Borrower agrees to do all things reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated by,
and to carry out the purposes of each Financing Document and each Project
Document, including, but not limited to, obtaining and maintaining all Core
Peruvian Governmental Approvals required in connection therewith.

     7.29 No Modifications of By-Laws. The Borrower shall not take any action to
amend or modify its Bylaws in circumstances where such amendment or
modification, could reasonably be expected to have a Material Adverse Effect.

     7.30 Business.

     (a) The Borrower shall not conduct any business other than any business
related to or incidental to the Current Operations and the Sulfide Project and
any activity contemplated in the Financing Documents, provided that the Borrower
shall have the right to conduct any other mining activity so long as (i) such
activity is conducted in the Concessions area, (ii) such activity does not have
a Material Adverse Effect, (iii) the Borrower observes its affirmative covenants
(including, without limitation, with respect to insurance) in relation to such
activity, (iv) the Senior Lenders are given a first priority security interest
in the assets of Borrower related to such activity, and (v) such activity is
undertaken after the Completion Release Date. Subject to Section 7.22, this
provision shall not prevent Borrower from entering into agreements or other
arrangements, with PDC or any of its Affiliates regarding any copper concentrate
leaching facilities constructed, owned or operated by PDC or such Affiliate of
PDC.

     (b) The Borrower shall not establish a place of business in the United
States unless Borrower (i) notifies in writing, at least 30 days in advance, the
Administrative Agent of its intention to do so and the Administrative Agent
(acting upon instructions of the Majority Facility Lenders) does not object in
writing within 30 days of such notification and (ii) has taken all steps then
required pursuant to the MSA to ensure the


                                       50



maintenance and perfection of the security interests created or purported to be
created pursuant to the Security Documents.

     7.31 Access. In addition to the rights set forth under Section 7.06, upon
request from the Administrative Agent (acting upon instructions of the Majority
Facility Lenders), the Borrower shall permit any Person designated by the
Majority Facility Lenders and not reasonably objected to by the Borrower, at the
expense and risk of the Senior Facility Lenders (provided that the reasonable
costs and expenses incurred by the Senior Facility Lenders pursuant to and in
connection with any site visits that are reasonably necessary for (i) review of
any proposed Incremental Capital Expenditures, or (ii) review of any request by
the Borrower for an amendment, waiver or modification of or supplement to any
Financing Document or (iii) review of any other matter relating to the
Borrower's non-compliance with the terms of any Financing Document (as
determined by the Majority Facility Lenders in their reasonable judgment) shall
be at the expense of the Borrower) and subject to the confidentiality provisions
set forth in Section 12.10, to visit and inspect the site of the Sulfide Project
and the Current Operations (so long as they adhere to the Company's safety and
health related procedures and regulations) and to discuss the business and
finances of the Borrower with officers of the Borrower, in each case during
normal business hours (but not more than once every calendar year if Borrower is
requested to reimburse the Senior Facility Lenders for their costs and expenses)
and in a manner that does not unreasonably disrupt the operation of the
Business. The Borrower shall offer all reasonable assistance to such Persons in
connection with any such visit.

     7.32 Operation of Business. The Borrower shall operate the Sulfide Project
in accordance with applicable good industry mining practice.

     7.33 No Merger or Consolidation. The Borrower shall not enter into any
merger or consolidation with any other entity.

     7.34 No Subsidiaries; no Acquisitions. Without the consent of the
Administrative Agent (acting pursuant to a Supermajority Facility Vote), the
Borrower shall not acquire any other Person (including by way of purchase of
stock or any other equity or ownership interest, or by way of a purchase of all
or substantially all of the assets of such Person, but excluding, for this
purpose, its indirect interest in the Pillones Dam, if applicable) and shall not
form any subsidiaries.

     7.35 Construction of Project. The Borrower shall construct and complete the
Sulfide Project in all material respects in accordance with the description of
the Sulfide Project set forth in Schedule D on or prior to the Target Completion
Date.

     7.36 Operator. The Borrower shall not exercise any right it may have to
terminate the Operator's Agreement, unless the Administrative Agent (acting
pursuant to a Supermajority Facility Vote) has consented to such termination and
the Borrower shall


                                       51



not appoint any successor Operator without the consent of the Administrative
Agent (acting pursuant to a Supermajority Facility Vote), provided that this
covenant shall not limit the ability of the Borrower to replace the Operator by
any other Affiliate of PDC the obligations of which are guaranteed by PDC.

     7.37 Limitation on Loans. The Borrower shall not make any loan or advance
to any Person except for (i) Permitted Investments, (ii) down payments and
prepayments to suppliers, (iii) loans and advances to its employees and loans to
employees of the Operator for travel, moving and household expenses of such
employees and for the purchase of land and the construction and purchase of
housing for such employees, in the ordinary course of business and in an
aggregate amount not exceeding U.S.$5,000,000 (or its Equivalent) at any one
time outstanding and (iv) other loans and advances in connection with the
Business in an aggregate amount not exceeding U.S.$10,000,000 (or its
Equivalent) at any one time outstanding.

     7.38 Request for Completion Loans. In case of a Confirmed Cash Shortfall,
the Borrower shall timely request Completion Loans from the Parent Companies in
accordance with the Completion Guarantee, if any, so as to enable Borrower to
timely meet all its financial obligations.

     7.39 Limitation on Share Issuance. The Borrower shall not issue any Common
Stock or other securities convertible into Common Stock if the issuance of such
Common Stock would cause the equity ownership of any of the Shareholders to fall
below its Minimum Required Equity Ownership, without the consent of the
Administrative Agent (acting pursuant to a Supermajority Facility vote).

     7.40 Ethical Business Practices. The Borrower shall comply in all material
respects with all applicable laws regarding corrupt practices.

                                  ARTICLE VIII

                                    INSURANCE

     8.01 Maintenance of Insurance. The Borrower shall at all times (either
directly or indirectly through one or several global insurance policies
maintained by PDC or any of its Affiliates) maintain such property and casualty
insurance coverage and comply with all such other requirements as specified in
Appendix II.

     8.02 Insurance Consultant. The Borrower shall pay the Senior Facility
Lenders for the reasonable fees and expenses of the Insurance Consultant
appointed to advise the Senior Facility Lenders with respect to (i) the issuance
of the report contemplated in Section 5.01(j) and (ii) the issuance of a report
confirming the insurance coverage (including reinsurance coverage) obtained by
the Borrower complies with the


                                       52



requirements of Article VIII at the time of achievement of Full Completion or
satisfaction of Partial Completion.

                                   ARTICLE IX

                       MPA EVENTS OF DEFAULT AND REMEDIES

     9.01 MPA Events of Default. Subject to Section 9.02, each of the following
events shall be a "MPA Event of Default":

     (a) Payment Default. (i) The Borrower has defaulted in the payment of any
Senior Loans Obligation (other than a Senior Loans Obligation resulting from an
acceleration of JBIC's Outstanding Base Amount in accordance with Section 10.02
of the JBIC Loan Agreement) when and as such payment shall be due and payable
(whether at scheduled maturity, by mandatory prepayment, by acceleration or
otherwise) and such failure shall continue for (A) in the case of payment of
principal, interest or fees on Senior Loans Obligations, 1 Business Day from the
due date of such payment; and (B) in the case of payment of any other Senior
Loans Obligations, 3 Business Days from the date notice of such failure to pay
was received by the Borrower;

          (ii) The Borrower has defaulted in the payment of a Senior Loans
     Obligation resulting from an acceleration of JBIC's Outstanding Base Amount
     in accordance with Section 10.02 of the JBIC Loan Agreement and 180 days
     after the date of acceleration by JBIC of its Outstanding Base Amount, (i)
     JBIC has not rescinded the acceleration of such acceleration and (ii) the
     Borrower has failed to pay such Senior Loans Obligation as contemplated
     under clause (ii) of Section 3.10A(a).

     (b) Breach of Representation or Warranty. A representation or warranty made
by the Borrower hereunder shall prove to have been false when made in any
material respect and such breach of representation or warranty could in the
reasonable judgment of the Majority Facility Lenders have a Material Adverse
Effect and is not corrected or cured within 10 Business Days after the notice
from the Administrative Agent (acting upon instructions from Majority Facility
Lenders) specifying such breach and requiring that it be remedied;

     (c) Breach of Covenant. The Borrower shall fail to observe or perform any
material obligation to be observed or performed by it hereunder (except for the
obligations set forth in Section 7.10(c) which are addressed under clause
(f)(iii) below and in Section 7.12 which are addressed in clause (f)(i) below)
or under any other Financing Document (other than those covenants that could
result in a JBIC Event of Default) or Project Document to which it is a party,
which failure could in the reasonable judgment of the Majority Facility Lenders
have a Material Adverse Effect and such failure shall continue unremedied for:


                                       53



          (i) with respect to the covenant set forth in Sections 7.19 (Notice of
     MPA Defaults; Extraordinary Notices), 15 days from the date the
     Administrative Agent (acting upon instructions from the Majority Facility
     Lenders) gives the Borrower written notice of the breach of such covenant;

          (ii) (A) with respect to any of the covenants set forth in Sections
     7.04 (Use of Proceeds), 7.06 (Confirmation of Progress of Construction),
     7.07 (Preservation of Assets), 7.08 (Mining Concessions), except as
     provided under clause (B) below, 7.09 (Minimum Production), 7.10(a) and (b)
     (Offtake Agreements), 7.11(ii) (Sales of Concentrates and Cathodes), 7.16
     (Limitation on Debt), 7.17 (Limitation on Liens), 7.27 (Determination of
     Tax Contingency Reserve Amount), 7.29 (No Modifications of By-Laws), 7.30
     (Business), 7.31 (Access), 7.34 (No Subsidiaries; No Acquisitions), 7.37
     (Limitation on Loans), and 7.40 (Ethical Business Practices), 30 days from
     the date the Administrative Agent (acting upon instructions from the
     Majority Facility Lenders) gives the Borrower written notice of the breach
     of such covenant and (B) with respect to any of the covenants set forth in
     Sections 7.01 (Maintenance of Existence) and 7.08(a) (Mining Concessions),
     but only as it relates to the covenant to keep the Core Mining Concessions
     in full force and effect, 30 days from the date of the occurrence of the
     breach of covenant;

          (iii) with respect to any covenant under any Security Document, 45
     days from the date the Administrative Agent (acting upon instructions from
     the Majority Facility Lenders) gives the Borrower written notice of the
     breach of such covenant; and

          (iv) with respect to any of the covenants set forth in Sections 7.02
     (Book, Records and Accounts), 7.03 (Principal Place of Business), 7.05
     (Information), 7.11(i) (Sales of Concentrates and Cathodes), 7.13 (Power
     Generation Facility), 7.14 (Taxes), 7.15 (Sulfide Project, Capital
     Expenditures), 7.18 (Drawdowns of Senior Loans), 7.21 (Compliance with
     Law), 7.22 (Transactions with Affiliates), 7.23 (Environmental Compliance),
     7.24 (Permitted Hedges), 7.25 (Ordinary Course Transactions), 7.26
     (Determination of Extraordinary Major Maintenance Reserve Amount), 7.28
     (Further Assurance), 7.32 (Operation of Business), 7.35 (Construction of
     Project), 7.38 (Request for Completion Loans) and any other obligation of
     the Borrower under the Financing Documents, and the insurance related
     covenants set forth in Appendix II, 90 days from the date the
     Administrative Agent (acting upon instructions from the Majority Facility
     Lenders) gives the Borrower written notice of the breach of such covenant,

provided that a breach of the covenants set forth in Sections 7.20 (Restricted
Payments), 7.33 (No Merger or Consolidation), 7.36 (Operator) and 7.39
(Limitation on Share


                                       54



Issuance) shall be an MPA Event of Default, unless cured prior to receipt of the
declaration required pursuant to Section 9.02(a);

     (d) Bankruptcy. The Borrower commences a proceeding under any applicable
bankruptcy, reorganization, arrangement, readjustment of debt, relief of
debtors, dissolution, insolvency, liquidation or similar law (whether now or
hereafter in effect) relating to itself, or is declared bankrupt, is dissolved
by reason of insolvency or makes a general assignment for the benefit of
creditors, or any action is taken by it for the purpose of effecting any of the
foregoing or by a receiver, custodian or trustee or other officer or
representative of a court or of creditors; or there is commenced against it any
such proceeding which remains undismissed for 60 days from the date the Borrower
receives such notification from the court where such proceeding has been filed;

     (e) Cross Default. Any Indebtedness of the Borrower (other than the Senior
Loans and Subordinated Loans) that is due and payable (it being understood that
Indebtedness other than for borrowed money shall not be deemed to be due and
payable if there is a good faith dispute as to the amount of such Indebtedness)
in a principal amount in excess of U.S.$10,000,000 or its Equivalent is not paid
when due (and any grace period relating thereto has expired) or becomes or is
declared to be due and payable prior to the stated maturity thereof and such
Indebtedness shall remain unpaid for 30 days from its due date or from the due
date of such acceleration;

     (f) Project Documents.

          (i) Project Documents (Other Than Governmental Approvals and Offtake
     Agreements). (i) There has been an uncured breach or termination, or an
     assignment, revision, amendment, modification or replacement, of a material
     Project Document (other than a Governmental Approval and an Offtake
     Agreement) that is reasonably likely to have a Material Adverse Lender
     Effect and the Borrower fails to cure (in the case of an assignment,
     revision, amendment, modification or replacement) or to enter into a
     replacement contract (in the case of an uncured breach or termination) on
     similar terms and conditions within 90 days after notice from the
     Administrative Agent (acting upon instructions from the Majority Facility
     Lenders) of the occurrence of such breach or termination or (ii) there has
     been an uncured breach or termination, or an assignment, revision,
     amendment, modification or replacement, of an Identified Material Project
     Document (other than a Governmental Approval and an Offtake Agreement) that
     is reasonably likely to have a Material Adverse Project Effect and the
     Borrower fails to cure (in the case of an assignment, revision, amendment,
     modification or replacement) or to enter into a replacement contract (in
     the case of an uncured breach or termination) on similar terms and
     conditions within 180 days after notice from the Administrative Agent
     (acting upon instructions from the Majority Facility Lenders) of the
     occurrence of such breach or termination;


                                       55



          (ii) Governmental Approvals. The Borrower shall fail to obtain,
     maintain or renew any Core Peruvian Governmental Approval and (i) such
     failure is reasonably likely to have a Material Adverse Effect and the
     Borrower fails to obtain a replacement Core Peruvian Governmental Approval
     within 90 days after the occurrence of such failure to obtain, maintain or
     renew such Core Peruvian Governmental Approval or (ii) in the case of a
     Core Peruvian Governmental Approval that is an Identified Material Project
     Document, such failure is reasonably likely to have a Material Adverse
     Project Effect and the Borrower fails to obtain a replacement Core Peruvian
     Governmental Approval within 180 days after the occurrence of such failure
     to obtain, maintain or renew such Core Peruvian Governmental Approval; and

          (iii) Offtake Agreements. There has been a termination of an Offtake
     Agreement and the Borrower fails to enter into a replacement contract with
     a counterparty that qualifies as an Acceptable Guarantor or with a Parent
     Company or an Affiliate of a Parent Company at then current market price
     and for similar quantities and duration within 90 days after the occurrence
     of such breach or termination.

     (g) Material Collateral.

          (i) Security interests purported to be created by or under the
     Security Documents in (w) the Accounts or Common Stock of the Borrower, or
     Subordinated Debt (x) the Borrower's rights under the Identified Material
     Project Agreements, (y) the Core Mining Concessions or (z) other material
     Project Property with respect to which a security interest is contemplated
     to be created in the MSA shall fail or cease to be (and, except in the case
     of Project Property covered by subclause (w), so remain for at least 45
     days after written notice from the Administrative Agent acting upon
     instructions from the Majority Facility Lenders) validly perfected first
     priority security interests and valid assignments of rights, as applicable,
     in favor of the Senior Lenders (other than to the extent noted in legal
     opinions of counsel to the Borrower delivered on or prior to the Closing
     Date in satisfaction of Section 5.01(g)).

          (ii) A Person other than the Offshore Collateral Agent, the Onshore
     Collateral Agent or a Senior Lender shall have attached, (a) Collateral
     consisting of tangible Project Property having a book value equal to or
     greater than 5% of the total book value of all tangible Project Property
     (as shown on the balance sheets of the Borrower as of the immediately
     preceding month-end) or (b) all or any material part of the other
     Collateral, and in either such case, any attachment of or any judgment Lien
     against any of such Collateral (x) shall remain unlifted, unstayed or
     undischarged for a period of 180 days or (y) shall be upheld in a final
     nonappealable judgment by a court of competent jurisdiction.


                                       56



     (h) PDC Completion Guarantee Acceleration Event. The Administrative Agent
(acting upon instructions from the Majority Facility Lenders) has notified the
Borrower in writing that a Completion Guarantee Acceleration Event has occurred
with respect to PDC and either (i) one year has elapsed since the date of such
notice or (ii) the Non-Accelerated Parent Companies fail to work in good faith
(and, upon request from the Administrative Agent pursuant to instructions from
any Senior Facility Lender, to confirm that they are so doing) to develop a
proposal to identify an Acceptable PD Replacement that would (x) succeed to the
management obligations of the Operator pursuant to the Operator's Agreement, (y)
succeed to the financial obligations of PDC pursuant to the Completion
Guarantee, and (z) assume the obligations to purchase the Borrower's production
of Concentrate and Cathodes pursuant to the terms of the PD Concentrate Sales
Agreement and the PD Cathodes Sales Agreement.

     (i) BVN Completion Guarantee Acceleration Event. The Administrative Agent
(acting upon instructions from the Majority Facility Lenders) has notified the
Borrower in writing that a Completion Guarantee Acceleration Event has occurred
with respect to BVN and one year has passed since the date of such notice
without any of the following events occurring: (i) the Non-Accelerated Parent
Companies have increased their exposure under the Completion Guarantee (with PDC
participating in such increase at least on a pro rata basis) or the Senior
Facility Lenders have otherwise been provided with one or several Acceptable
Credit Support Instruments (which may be provided on a several basis), in each
case, to cover BVN's obligations under the Completion Guarantee that relate to
both past and future Advances (without giving effect to the acceleration of
BVN's obligations as a result of the Completion Guarantee Acceleration Event),
(ii) BVN has paid all of its accelerated obligations under the Completion
Guarantee, (iii) Full Completion is achieved, or (iv) following the occurrence
of such a Completion Guarantee Acceleration Event, a determination is made by a
reputable independent public accountant of international standing that the Net
Worth of BVN exceeds U.S.$660 million.

     (j) Event of Political Force Majeure. An Event of Political Force Majeure
shall have been declared in accordance with Section 11.01 or by a Parent
Company, and such Event of Political Force Majeure shall be Continuing for a
period of 360 days following such declaration.

     (k) Termination of the Completion Guarantee.

          (i) A Parent Company shall have terminated its obligations under the
     Completion Guarantee for any reason, including following the occurrence of
     an Event of Political Force Majeure pursuant to Article V of the Completion
     Guarantee;

          (ii) the Completion Guarantee is declared in a final non-appealable
     judgment to be unenforceable against a Parent Company; and


                                       57



          (iii) the Completion Guarantee is terminated prior to the Guarantee
     Release Date.

     (l) Abandonment, Total Loss. Abandonment or Total Loss of the Sulfide
Project or Current Operations shall have occurred.

     (m) Completion.

          (i) Neither Full Completion nor Partial Completion is achieved by the
     Target Completion Date; or

          (ii) Partial Completion is achieved by the Target Completion Date but
     the Debt Buy-Down Release Date does not occur within twelve (12) months
     following the Target Completion Date,

provided that (i) the Debt Buy Down Closing shall only be deemed to have
occurred in the circumstances contemplated in Section 3.03(d) of the Completion
Guarantee, and (ii) during the pendency of a Completion Arbitration and until
the expiration of the additional period of time allowed under the Completion
Guarantee to replace the Completion Certificate or exercise the Debt Buy-Down
Option following such Completion Arbitration, Borrower shall not be deemed to be
in Default under this provision, notwithstanding the fact that, pursuant to the
Completion Guarantee, Full Completion or Partial Completion, as the case may be,
shall be deemed not to have occurred, so long as the Parent Companies are in
compliance with clauses (ii) and (iii) of Section 2.03(c) of the Completion
Guarantee.

     (n) Unsatisfied Judgments. Final judgment or judgments for the payment of
money in excess of U.S.$10,000,000 in the aggregate or its Equivalent shall be
rendered by a court or courts against the Borrower and shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of 60
days from the date of entry thereof.

     (o) Breach of Transfer Restrictions Agreement. Any of the Shareholders or
the Parents breaches its share transfer restrictions set forth in Article II of
the Transfer Restrictions Agreement.

     (p) Unenforceability or Repudiation of Financing Document.

          (i) Any of the Financing Documents is declared in a final
     non-appealable judgment (in a proceeding where the Borrower, the Parent
     Companies, the Shareholders or any of their respective Affiliates have
     claimed unenforceability) to be unenforceable against the Borrower, the
     Parent Companies or the Shareholders, or any such party shall have
     expressly repudiated its obligations thereunder and ceased to perform such
     obligations.


                                       58



          (ii) Any of the Financing Documents is declared in a final
     non-appealable judgment (other than any such judgment resulting from a
     proceeding in which the Borrower, the Parent Companies, the Shareholders or
     any of their respective Affiliates have claimed unenforceability) to be
     unenforceable against the Borrower, the Parent Companies or the
     Shareholders, and such unenforceability is not remedied within 120 days or
     such agreement is not replaced within 120 days; provided that no default
     shall occur if any such Financing Document shall be replaced on terms
     reasonably acceptable to the Senior Facility Lenders acting in accordance
     with Section 10.01. For the purpose of this provision, a statement or
     dispute regarding the scope or nature regarding a parties' rights and
     obligations under any such agreement, and a failure to perform any
     particular obligation thereunder, shall not by itself be deemed to be a
     repudiation thereof.

     (q) Improper Transfers. An Authorized Officer of the Borrower delivers to
the Trustee (i) instructions (other than good faith errors or mistakes) to make
transfers from the Proceeds Account that constitute a breach of the MSA or (ii)
certificates pursuant to which the Trustee is expected to make transfers from
the Proceeds Account that include representations that are known by the Borrower
to be inaccurate.

     (r) Permanent Mine Closure. Borrower voluntarily implements, or is ordered
pursuant to a final nonappealable judgment (or a final determination by any
Governmental Authority that Borrower has not challenged or has ceased to
challenge) to implement, a permanent closure of all or substantially all of the
Mines, in each case, in circumstances requiring the Borrower to implement the
Closure Plan, provided that the foregoing shall not apply to partial or
temporary closures of the Mines for any reason.

     9.02 Declaration of MPA Event of Default.

     (a) Upon receipt by the Administrative Agent of a certificate from any
Senior Facility Lender stating that an MPA Event of Default described in Section
9.01(a), Section 9.01(l) or 9.01(m) has occurred and remains uncured, the
Administrative Agent (subject to Section 9.03 hereof), by written notice to the
Borrower and each Senior Facility Lender in accordance with Section 12.11, shall
declare that an "MPA Event of Default" has occurred.

     (b) An "MPA Event of Default" shall also occur without such declaration or
other notice, upon the occurrence of the MPA Event of Default referred to in
Section 9.01(d) hereof with respect to the Borrower.

     (c) Upon receipt by the Administrative Agent of a certificate approved by
the Majority Facility Lenders stating that an MPA Event of Default (other than
an MPA Event of Default referred to in Section 9.02(a) or 9.02(b)) has occurred
and remains uncured, the Administrative Agent (subject to Section 9.03 hereof),
by written notice to


                                       59



the Borrower and each Senior Facility Lender in accordance with Section 12.11,
shall declare that an "MPA Event of Default" has occurred.

     9.03 Cessation of MPA Event of Default. Any Senior Facility Lender that has
given, or approved, a certificate or declared an MPA Event of Default, pursuant
to Section 9.02 hereof, agrees promptly to notify the Administrative Agent upon
the cessation of the MPA Event of Default to which such certificate related and
of which such Senior Facility Lender has knowledge. Any notice given pursuant to
this Section 9.03 is an "MPA Cessation Notice". The Administrative Agent shall
promptly forward such MPA Cessation Notice to the Borrower in accordance with
Section 12.11. An MPA Cessation Notice shall be effective, (i) if it relates to
an MPA Event of Default described in Section 9.01(a), upon receipt by the
Borrower, if it is approved by the Senior Facility Lender that has declared such
MPA Event of Default or (so long as such MPA Event of Default shall have been
fully cured) the Majority Facility Lenders, and (ii) otherwise, upon receipt by
the Borrower, if it is approved by the Majority Facility Lenders.

     9.04 Abandonment. If the Borrower voluntarily ceases all or substantially
all construction or production activities of the Sulfide Project or the Current
Operations and such cessation continues without interruption for 90 days, the
Administrative Agent (acting pursuant to instructions from any Senior Facility
Lender) shall have the right to deliver to the Borrower a notice requesting a
certificate to the effect that the Borrower intends to cause all or
substantially all such construction or production activities to resume as soon
as is commercially practicable. If (i) within 30 days following delivery of such
notice, the certificate is not delivered or the Borrower does not resume all or
substantially all such activities, (ii) the Borrower timely delivers such
certificate but does not resume all or substantially all such activities within
30 days following such delivery, or (iii) the Borrower timely delivers such
certificate and resumes such activities but does not maintain such activities
for at least 120 days during the 180-day period following timely delivery of
such certificate, then the Administrative Agent (acting pursuant to instructions
from any Senior Facility Lender) shall have the right to declare that
Abandonment has occurred (such declaration being herein referred to as
"Abandonment"). For purposes of this provision, the Borrower shall not be deemed
to have voluntarily ceased construction or production activities of the Sulfide
Project or the Current Operations if the cessation of construction or production
activities is caused by an Event of Political Force Majeure or results from the
depletion of the ore resources for the Current Operations, which is expected to
occur prior to the Final Maturity Date.

                                    ARTICLE X

                      SENIOR FACILITY LENDERS ARRANGEMENTS

     10.01 Senior Facility Lenders Actions. Except as otherwise provided herein,
any Senior Facility Lenders Action shall be made or taken only by the
Administrative Agent and only in accordance with the provisions of this Section
10.01:


                                       60



     (a) The following Senior Facility Lenders Action shall be taken by the
Administrative Agent pursuant to (and only pursuant to) written instructions
from each Senior Facility Lender:

          (i) To approve an increase in the Peruvian Bonds Cap as contemplated
     in Section 2.02(a);

          (ii) To enter into any Material Financing Document Amendment with
     respect to any of the Senior Facility Lender Financing Documents;

          (iii) To waive any condition precedent to the initial disbursement of
     a Base Advance;

          (iv) To waive any condition precedent to the subsequent disbursement
     of a Base Advance or the disbursement of a Stand-By Advance set forth in
     Section 5.01(o), (p), (q) subclause (i), (x) and (y), as referred to in
     Section 5.02; and

          (v) To consent to an assignment or transfer by the Borrower of rights
     and obligations pursuant to Section 12.13.

     (b) The following Senior Facility Lenders Actions shall be taken by the
Administrative Agent acting upon written instructions from the Supermajority
Facility Lenders:

          (i) To notify the Borrower that a condition precedent is not satisfied
     in accordance with Section 5.03;

          (ii) To consent to the amendments by the Borrower of Project Documents
     pursuant to Section 7.12(a);

          (iii) To consent to creation of subsidiaries and acquisitions by the
     Borrower pursuant to Section 7.34;

          (iv) To consent to the termination of the Operator's Agreement or to
     the appointment of any successor Operator pursuant to Section 7.36;

          (v) To consent to the issuance of Common Stock or other securities
     convertible to Common Stock pursuant to Section 7.39;

          (vi) To declare the occurrence of an Event of Political Force Majeure
     pursuant to Section 11.01;

          (vii) To consent to the amendment of the schedule of minimum insurance
     requirements set forth in Appendix II pursuant to Article VIII;


                                       61



          (viii) To create, accept and execute any Senior Facility Lenders
     Financing Document and any amendment, modification, change, supplement or
     waiver of any of the Senior Facility Lenders Financing Documents, that is
     not a condition precedent to an Advance and is not a Material Financing
     Document Amendment; and

          (ix) To approve a Transfer of Restricted Common Stock or Subordinated
     Loans in accordance with Section 2.02 of the TRA.

     (c) The following Senior Facility Lenders Actions shall be taken by the
Administrative Agent acting upon instructions from the Majority Facility
Lenders:

          (i) To object under Section 2.02 with respect to an issuance of
     Peruvian Bonds;

          (ii) To object to the Borrower's proposed plan for use of insurance
     proceeds pursuant to Sections 3.06(b) and 3.06(c);

          (iii) [intentionally omitted];

          (iv) To determine whether a Person is an Acceptable PD Replacement
     pursuant to Section 5.01(q);

          (v) To request the Independent Engineer to confirm the progress of
     project construction pursuant to Section 7.06;

          (vi) To object to the Borrower's proposal for disposal of Project
     Property pursuant to Section 7.07(b);

          (vii) To engage the Independent Engineer to provide reports with
     respect to the Borrower's environmental compliance pursuant to Section
     7.23(g);

          (viii) To request access to the Site of the Sulfide Project and the
     Current Operations pursuant to Section 7.31;

          (ix) To give notice regarding insurance coverage to the Borrower
     pursuant to Article VIII and Appendix II;

          (x) To request information from the Borrower pursuant to Article VIII
     and Appendix II;

          (xi) To notify the Borrower with respect to a breach of a
     representation or warranty pursuant to Section 9.01(b) or of a breach of
     covenant pursuant to Section 9.01(c);


                                       62



          (xii) To notify the Borrower with respect to a breach or termination
     of a Project Document pursuant to Section 9.01(f);

          (xiii) To notify the Borrower in writing that a Completion Guarantee
     Acceleration Event has occurred with respect to PDC or BVN pursuant to
     Section 9.01(h) or Section 9.01(i), respectively;

          (xiv) To declare an MPA Event of Default pursuant to Section 9.02(b);

          (xv) To declare the cessation of an Event of Political Force Majeure
     pursuant to Section 11.02(b);

          (xvi) To object to the Borrower's proposal for the replacement of the
     Independent Public Accountant pursuant to Section 12.01(a);

          (xvii) To replace the Independent Engineer or the Insurance Consultant
     pursuant to Section 12.01(b);

          (xviii) To appoint an arbitrator pursuant to Section 12.17(b); and

          (xix) Any other Senior Facility Lenders Action that is not otherwise
     described in this Section 10.01 or with respect to which no specific
     approval requirement has been set forth in any other Sections of this
     Agreement.

     (d) The following Senior Facility Lender Actions shall be taken by the
Administrative Agent upon instructions from any Senior Facility Lenders:

          (i) To declare an MPA Event of Default pursuant to Section 9.02(a);

          (ii) To give notice to the Borrower requesting its resumption of
     construction or production activity or to declare abandonment pursuant to
     Section 9.04; and

          (iii) To request confirmation that non-accelerated Parent Companies
     are working in good faith to develop a proposal to identify an Acceptable
     PD Replacement pursuant to Section 9.01(h).

     (e) The Administrative Agent may take any Senior Facility Lender Action
that is a Routine Matter without seeking prior approval from the Senior Facility
Lenders, provided that the Administrative Agent may elect to seek approval by
the Majority Facility Lenders.


                                       63



     10.02 Sharing of Information.

     (a) Each Senior Facility Lender shall use reasonable efforts promptly to
make available to the Administrative Agent any material information it receives
regarding (i) the construction or operation of the Sulfide Project, the
prospects for the timely occurrence of the Completion Release Date, or the
financial condition or business of the Borrower, (ii) the Borrower's ability to
pay Senior Debt Obligations when due, (iii) the security interests granted by or
pursuant to this Agreement and the Security Documents, (iv) the Parent
Companies' ability to comply with their respective obligations under the
Completion Guarantee and Transfer Restrictions Agreement, (v) the occurrence of
an MPA Event of Default or a PC Event of Default or (vi) any other matter
regarding the Borrower, the Parent Companies or the Senior Facility Loans which
such Senior Facility Lender considers to be of common interest to Senior
Facility Lenders; provided that (i) this Section shall not require any Senior
Facility Lender to make available to any other Senior Facility Lender
information which, in such Senior Facility Lender's reasonable judgment, is not
of common interest to the other Senior Facility Lenders or which information is
subject to confidentiality restrictions which prohibit such disclosure and (ii)
no Senior Facility Lender shall have any liability for any failure to make
available to other Senior Facility Lenders such information or for any
inaccuracy or incompleteness of any such information made available by it in
good faith.

     (b) Each Senior Facility Lender shall notify the Administrative Agent of
any payment received in respect of Senior Loans Obligations in excess of its Pro
Rata Payment then due (other than payments excluded under Section 3.04).

     (c) The Administrative Agent shall promptly communicate to each other
Senior Facility Lender any information received by it from a Senior Facility
Lender or from the Borrower pursuant to this Agreement or any PC Agreement.

     10.03 General Consultation.

     (a) Without prejudice to the rights and claims of each Senior Facility
Lender or Senior Facility Lenders Group hereunder and under their respective
Senior Facility Loan Agreements or the number of Senior Facility Lenders Groups
required to take action hereunder, each Senior Facility Lender acknowledges
that, in view of the common undivided interest of Senior Facility Lenders in the
Collateral, actions by any one Senior Facility Lender with respect thereto will
have a direct effect on the economic interests of the other Senior Facility
Lenders.

     (b) Each Senior Facility Lender agrees that (i) to the extent practicable
in the circumstances, it shall endeavor to afford each other a reasonable
opportunity to exchange views before taking any action that could affect the
Borrower, the Sulfide Project, the Collateral or the Senior Loans Obligations of
other Senior Facility Lenders, and (ii) at the request of any Senior Facility
Lender, it shall exchange views with the


                                       64



other Senior Facility Lenders on any substantial and adverse change in the
financial condition or business of the Borrower, in the security interests
created by or pursuant to the Security Documents, in the progress or cost of the
Sulfide Project, in the ability of the Parent Companies to comply with their
obligations under the Completion Guarantee, in the ability of any party thereto
to comply with its obligations under the Transfer Restrictions Agreement, in the
prospects for the timely occurrence of the Completion Release Date or in the
prospects for timely repayment of Senior Loans Obligations.

     (c) It is the intention of each Senior Facility Lender that, in connection
with any action or decision requiring a determination by more than one Senior
Facility Lender, all Senior Facility Lenders are to be afforded the opportunity
to express their views, and to vote, on the matter subject to such
determination.

     10.04 Sharing of Non-Pro Rata Payments.

     (a) Each Senior Facility Lender agrees that in the event any Senior
Facility Lender shall, after giving effect to any incremental payment for
Indemnified Tax withholding, obtain payment of any amounts due to it on or in
respect of Senior Loans Obligations, whether through exercise of a right of
set-off, banker's lien or counterclaim or from any security or from any
realization (whether through attachment, foreclosure or otherwise) of assets of
the Borrower or the Parent Companies or otherwise, and such payment is not a Pro
Rata Payment, then, except in connection with (i) a prepayment of all or part of
the outstanding Stand-By Amount of the Commercial Banks with the proceeds of the
issuance of the Peruvian Bonds, (ii) payment of Funding Losses and (iii)
mandatory prepayment contemplated in Section 3.12, such Senior Facility Lender
shall promptly remit to the Administrative Agent for distribution to the other
Senior Facility Lenders the amount of such payment necessary to ensure that each
Senior Facility Lender shall have received a Pro Rata Payment.

     (b) The Borrower consents and agrees to the foregoing arrangement, and
agrees that any provision to the contrary notwithstanding:

          (i) any Senior Facility Lender that has received a payment that is not
     a Pro Rata Payment and has remitted the amount of such payment to the
     Administrative Agent pursuant to this Section shall be deemed to have
     received payment only of the amount received by such Senior Facility Lender
     after redistribution by the Administrative Agent to other Senior Facility
     Lenders, and any Senior Facility Lender that has received a payment
     pursuant to this Section from the Administrative Agent shall be deemed to
     have been paid such amount by the Borrower; and,

          (ii) if any sharing of payments pursuant to this Section shall (with
     the consent of all Senior Facility Lenders) have been accomplished by the
     purchase by any Senior Facility Lender of participations in Senior Loan
     Facility


                                       65



     Obligations owed to another Senior Facility Lender, such purchasing Senior
     Facility Lender shall have and may exercise all legal and equitable rights
     and remedies (including rights of set-off but excluding voting rights) with
     respect to such participation as fully as if such Senior Facility Lender
     were the holder of a direct Senior Loan Facility Obligation in the amount
     of such participation.

     10.05 Termination of Senior Debt Commitments. In the event the Commitment
of a Senior Facility Lender is terminated prior to disbursement of any Advance
by such Senior Facility Lender, such Senior Facility Lender shall cease to be a
party to this Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement and the Security Documents.

     10.06 Global Coordinator. The Global Coordinator shall coordinate globally
the lending arrangements among the Senior Facility Lenders. The Global
Coordinator shall not be entitled to receive any compensation for such role.

                                   ARTICLE XI

                        POLITICAL EVENTS OF FORCE MAJEURE

     11.01 Declaration of Event of Political Force Majeure. Upon the Continuance
of an Event of Political Force Majeure, the Administrative Agent (acting
pursuant to a Supermajority Facility Vote) shall have the right, by written
notice delivered in accordance with Section 11.02, to declare that an Event of
Political Force Majeure has occurred and is Continuing.

     11.02 Notices by Administrative Agent.

     (a) In order for the Administrative Agent to declare that an Event of
Political Force Majeure has occurred pursuant to Section 11.01, the
Administrative Agent shall deliver a certificate to the Borrower, setting forth
in reasonable detail, as applicable, (i) the events, conditions, circumstances
or occurrences that constitute an Event of Political Force Majeure, (ii) the
type of Event of Political Force Majeure which has occurred, and (iii) the date
as of which such Event of Political Force Majeure has occurred.

     (b) If an Event of Political Force Majeure declared under Section 11.01 has
ceased, the Administrative Agent (acting upon instructions from the Majority
Facility Lenders) shall deliver a notice to the Borrower declaring that such
Event of Political Force Majeure has ceased.

     11.03 Arbitration. The Borrower shall have 30 days after receipt of a
certificate delivered under Section 11.02 (a) to deliver a notice to the Senior
Facility Lenders to the effect that the Borrower (A) disagrees that an Event of
Political Force Majeure has


                                       66



occurred and is Continuing and (B) intends to commence arbitration proceedings
under Section 12.17, within 45 days of such notice. Each such notice shall state
in reasonable detail the bases for the Borrower's disagreement. If the Borrower
does not timely deliver a notice under this Section or if such arbitration is
not timely commenced by the Borrower, a certificate delivered under Section
11.02 shall be considered determinative of the items addressed therein. Pending
resolution of the arbitration proceedings, the certificate delivered under
Section 11.02 shall be given effect, except that, if an arbitration commenced
pursuant to this Section 11.03 is pending when the time periods set forth in
Section 9.01(j) to declare an MPA Event of Default expires and the
Administrative Agent has declared such MPA Event of Default in accordance with
Section 9.02, such MPA Event of Default shall not become effective until the
conclusion of such arbitration (and then only if arbitrators rule the
declaration of an MPA Event of Default was permitted under this Agreement).

                                   ARTICLE XII

                                  MISCELLANEOUS

     12.01 Service Providers.

     (a) The Borrower shall have the right from time to time to appoint any
independent public accountant selected by the Borrower to replace the
Independent Public Accountants, so long as (i) the Borrower has given no less
than 15 Business Days advance written notice to the Administrative Agent and
(ii) the Borrower has not, within such period, received written objections from
the Administrative Agent (acting upon instructions from the Majority Facility
Lenders) to such appointment.

     (b) The Administrative Agent (acting upon instructions from the Majority
Facility Lenders) may remove the Independent Engineer or the Insurance
Consultant with the prior written consent (not to be unreasonably withheld) of
the Borrower or, in the event that such Independent Engineer or the Insurance
Consultant, as the case may be, (i) ceases to be a consulting engineering firm
or an insurance consultant of recognized international standing, (ii) has become
an Affiliate of the Borrower or any of the Parent Companies, (iii) has developed
a conflict of interest that reasonably calls into question such firm's capacity
to exercise independent judgment or (iv) has failed to satisfactorily perform
its duties in its capacity as a Service Provider hereunder. If the Independent
Engineer or the Insurance Consultant is removed or resigns and thereby ceases to
act as Independent Engineer or the Insurance Consultant, as the case may be, for
purposes of this Agreement, (x) if no Borrower Event of Default has occurred and
is Continuing, the Administrative Agent (acting upon instructions from the
Majority Facility Lenders) shall, within 30 days of such removal and in any case
no later than 30 days after receipt of written request from the Borrower,
present to the Borrower a list of not less than four consulting engineering
firms or insurance consultants, as the case may be, from which the Borrower
shall select the replacement Independent Engineer or


                                       67



Insurance Consultant, as the case may be and (y) if a Borrower Event of Default
has occurred and is Continuing, the Administrative Agent (acting upon
instructions from the Majority Facility Lenders) shall select the replacement
Independent Engineer or Insurance Consultant, as the case may be.

     12.02 Accession. A Replacement Lender or a Bridge Loan Provider, as the
case may be, may become a party to this Agreement by entering into a New Party
Accession Agreement and thereupon such Replacement Lender or Bridge Loan
Provider, as the case may be, shall have all the rights and obligations of the
applicable Suspending Lender.

     12.03 Effectiveness. This Agreement shall come into full force and effect
upon its execution and delivery by each of the parties named on the signature
pages hereof.

     12.04 Termination. (a) This Agreement shall terminate upon the full payment
of all Senior Facility Loans Obligations owed to the Senior Facility Lenders.
Notwithstanding the termination of this Agreement as provided above in this
clause (a), the Borrower's obligations which are expressly provided in this
Agreement to survive shall survive.

     (b) Borrower may elect to terminate this Agreement by written notice to the
Administrative Agent thirty days after the date hereof (or such later date as
the Borrower and the other MPA Parties may agree) unless Borrower receives
evidence that the Hermes Guarantee has been issued and is in full force and
effect. Upon such election (i) the Borrower shall provide notice thereof to each
Senior Facility Lender, (ii) termination shall become effective 15 Business Days
from such notice and (iii) the costs and expenses section of the commitment
letters between the Borrower and the Senior Facility Lenders shall be
reinstated.

     12.05 Stability Agreement. Each of the Senior Facility Lenders hereby
acknowledges that a copy of the Stability Agreement has been made available to
it and that it has had adequate opportunity to review the Stability Agreement.
Each of the Senior Facility Lenders hereby accepts and acknowledges that the
Borrower does not intend to seek any new or amended stability agreement or other
agreement of a similar nature with respect to the Sulfide Project.

     12.06 Currency Equivalents. Calculation of currency equivalents (for any
amount, its "Equivalent") on any day shall be based on the foreign exchange spot
mid-rates for such day reported in The Wall Street Journal, Eastern Edition, or,
if not so reported, on the mid-market foreign exchange spot closing rates for
such day reported in the Financial Times, or, if not so reported, on spot
foreign exchange mid-market rates for trading among banks in amounts of
U.S.$1,000,000 and more as quoted by or to the Trustee.


                                       68



     12.07 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

     12.08 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable, the MPA Parties agree to the fullest extent they may
effectively do so that the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

     12.09 Entire Agreement. This Agreement and the other Financing Documents
constitute the entire agreement and understanding, and supersede all prior
agreements and understandings (both written and oral), between the Borrower and
the Senior Facility Lenders with respect to the financing by the Senior Facility
Lenders of the Sulfide Project and there are no warranties, representations or
other agreements between such parties in connection with the subject matter
hereof except as specifically set forth herein and therein.

     12.10 Confidentiality.

     (a) The Administrative Agent and each Senior Facility Lender shall maintain
the confidentiality of all information disclosed to it concerning the Current
Operations, the Sulfide Project, the assets and businesses of the Borrower and
the Financing Documents and shall, unless otherwise required by law, not
voluntarily disclose it without the prior written consent of the Borrower to
anyone other than to the directors, officers, employees, accountants,
consultants, counsel and representatives of the Administrative Agent or such
Senior Facility Lender, or any provider of political risk insurance or guarantee
to such Senior Facility Lender or any proposed transferee of Senior Facility
Loans with a reasonable need to know such information (provided, in the case of
such a proposed transferee or participant, that such transfer is permissible
under this Agreement and provided further, in the case of a provider of
political risk insurance or guarantee or a proposed transferee or participant,
that such provider of political risk insurance or guarantee or proposed
transferee or participant, as the case may be, first agrees in writing to be
subject to this Section 12.10), except that this provision shall not prevent the
Administrative Agent or a Senior Facility Lender from disclosing information
that (i) becomes generally available to the public other than as a result of a
disclosure by such Person or its representatives in violation of this Agreement,
(ii) is or becomes available to such Person on a non-confidential basis from a
source other than the Borrower when such source is entitled to make such
disclosure or (iii) subject to paragraph (c) below, is required to be disclosed
in accordance with any applicable Governmental Rule.

     (b) If such information is so disclosed to any Person, the disclosing party
agrees to instruct such Person to keep such information confidential.


                                       69



     (c) If such information is required to be disclosed in accordance with any
applicable Governmental Rule, unless specifically prohibited by applicable law
or court order, the disclosing party shall, prior to disclosure thereof, use its
best efforts to notify the Borrower of any request for disclosure of any such
information (i) by any Governmental Authority (other than any such request in
connection with an examination of the financial condition of any Senior Facility
Lender) or (ii) pursuant to any legal process, so that in each case the Borrower
may seek an appropriate protective order to maintain the confidentiality of such
information.

     (d) The agreements in this Section 12.10 shall survive the termination of
this Agreement.

     12.11 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given when
delivered in writing or sent by electronic mail confirmed by facsimile
transmission (with written confirmation of receipt, which confirmation may be by
facsimile transmission) (provided that a notice sent by electronic mail shall be
duly given only at the time the facsimile transmission confirming the same is
sent) or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such party (any such communication that is
not in writing shall be confirmed in writing):

     If to the Borrower, at
        c/o Asiento Minero Cerro Verde
        Uchumayo (Arequipa/Peru), Casilla Postal #299
        Shipping: Av. Alfonso Ugarte #304
        Cercado, Arequipa, Republic of Peru
        Attention: General Manager
        Telephone: (054) 283-363
        Facsimile: (054) 283-376

     with a copy to PDC, at:
        Phelps Dodge Tower
        1 North Central Avenue
        Phoenix, Arizona 85004
        U.S.A.
        Attention: Treasurer
        Telephone: (602) 366-8100
        Facsimile: (602) 366-8150


                                       70



     If to JBIC, at
        Japan Bank for International Cooperation
        4-1, Ohtemachi 1-Chome
        Chiyoda-ku
        Tokyo 100-8144 Japan
        Attention: Director, Division 3, Energy and Natural Resources Finance
        Department
        Telephone: +81-3-5218-3514
        Facsimile: +81-3-5218-3966

     If to SMBC, at
        1-2, Yurakucho 1-chome,
        Chiyoda-ku,
        Tokyo,
        Japan (Zip: 100-0006)
        Attention: Corporate Banking, Division No. 3
        Telephone: +81-3-3240-8940
        Facsimile: +81-3-3240-2360

     If to BOT-M, at
        2-7-1, Marunouchi, Chiyoda-Ku
        Tokyo 100-8388
        Japan
        Attention: Structured Finance Division, Project Finance Group
        Telephone: +81-3-5200-6555
        Facsimile: +81-3-5200-6558

     If to KfW, at

        Department X1a1 - Export and Project Finance (Natural Resources)
        Palmengartenstrasse 5-9
        60325 Frankfurt am Main
        Germany
        Attention: Stephan Pueschel
        Telephone: +49-69-7431-4649
        Facsimile: +49-69-7431-2016


                                       71



     If to any other Senior Facility Lender, to the Administrative Agent
        CALYON New York Branch
        1301 Avenue of the Americas
        New York, New York 10019
        Attention: Ted Vandermel
        Telephone: (212) 261-7888
        Facsimile: (212) 261-3421

     If to the Administrative Agent, at
        CALYON New York Branch
        1301 Avenue of the Americas
        New York, New York 10019
        Attention: Ted Vandermel
        Telephone: (212) 261-7888
        Facsimile: (212) 261-3421

     12.12 Benefits of Agreement. Nothing in this Agreement, express or implied,
shall give to any Person, other than the MPA Parties and their successors and
permitted assigns, any benefit or any legal or equitable right or remedy under
this Agreement.

     12.13 Successors and Assigns.

     (a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent and the Senior Facility Lenders and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent (acting upon instructions from all
Senior Facility Lenders).

     (b) Except with the prior written consent of the Borrower, which shall be
deemed given unless the Borrower objects (in writing) within 15 days of receipt
of notice, no Senior Facility Lender may assign any portion of its Commitment;
provided that no Borrower consent shall be required during the Continuance of a
Borrower Event of Default, and provided further that no Borrower consent shall
be required in the case of an assignment by a Commercial Bank to another Senior
Facility Lender.

     (c) Except with the prior written consent of the Borrower, which shall be
deemed given unless the Borrower either (x) reasonably objects (in writing)
within 15 days of its receipt of notice or (y) objects without reasons and makes
available an alternate purchaser prepared to acquire, on the same terms and
conditions, the portion of the Advance intended to be sold, no Senior Facility
Lender may assign all or any portion of any Advance made by such Senior Facility
Lender to any other lender, unless such assignee is (x) an Affiliate of such
assignor, (y) a provider of political risk insurance to such assignor or (z)
another Senior Facility Lender, provided that no Borrower consent shall be
required during the Continuance of a Borrower Event of Default.


                                       72



     (d) In circumstances where Borrower's consent to the assignment of a
Commitment or an Advance is granted or where such transfer is allowed, (i) the
assignee (if not a Senior Facility Lender) shall first enter into an accession
agreement (a "Transferee Accession Agreement") substantially in the form of
Exhibit F pursuant to which such assignee shall become a party to this
Agreement, the Master Security Agreement, the Completion Guarantee and the
Transfer Restriction Agreement, (ii) the Borrower shall not be required to
assume any obligations or costs under the Financing Documents, including for any
Indemnified Taxes or Other Taxes or any withholding tax liability, with respect
to the assignee in excess of such obligations or costs Borrower is required to
assume under the Financing Documents with respect to the assignor, (iii) the
assignor shall not assign any interest in a Commitment or an Advance in an
amount that is less than U.S.$5 million and (iv) the assignee shall be entitled
to the same rights and subject to the same restrictions as are set forth in this
Section 12.13 with respect to subsequent assignments by such assignee. Upon the
assignment by a Senior Facility Lender of the entirety of its undrawn
Commitments and of its interest in all outstanding Senior Facility Loans made by
such Senior Facility Lender, the assignor shall cease to be a Senior Facility
Lender under this Agreement, except that the assignor shall continue to enjoy
all rights of indemnification provided for hereunder that have occurred prior to
the assignment.

     (e) Each Senior Facility Lender may grant participations in all or any
portion of its Commitment or of any Advance made by such Senior Facility Lender
to any non-voting participant.

     12.14 Remedies.

     (a) Other than as stated expressly herein, no remedy herein conferred upon
the Senior Facility Lenders is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder, under the other Financing Documents, or now or
hereafter existing at law or in equity or by statute or otherwise.

     (b) No failure on the part of any Senior Facility Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power,
or privilege under this Agreement or any other Financing Document shall operate
as a waiver thereof nor shall any single or partial exercise of any right, power
or privilege under any such document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. No Senior
Facility Lender shall be responsible for the failure of any other Senior
Facility Lender to perform its obligations hereunder or under any Senior
Facility Loan Agreement.

     (c) In case any Senior Facility Lender shall have proceeded to enforce any
right, remedy or power under this Agreement or any other Financing Document and
the proceeding for the enforcement thereof shall have been discontinued or
abandoned for


                                       73



any reason or shall have been determined adversely to such Senior Facility
Lender, then and in every such case the Borrower and the Senior Facility Lenders
shall, subject to any effect of or determination in such proceeding, severally
and respectively be restored to their former positions and rights hereunder and
under such other Financing Document.

     12.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different MPA Parties on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.

     12.16 Consent to Jurisdiction.

     (a) The Borrower hereby irrevocably consents and agrees, for the benefit of
the Administrative Agent and each Senior Facility Lender, that, except as
contemplated in Section 12.17, any legal action, suit or proceeding against it
with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Agreement or the Senior Facility Loans
Obligations may be brought in any Federal or State court located in New York
County in the City of New York and hereby irrevocably accepts and submits to the
non-exclusive jurisdiction of such court with respect to any such action, suit
or proceeding. The Borrower hereby waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions, suits or
proceedings, brought in any such court and hereby further waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought therein has been brought in an inconvenient forum.

     (b) The Borrower hereby irrevocably appoints CT Corporation, with offices
at the date of this Agreement at 111 Eighth Avenue, New York, NY, as its
authorized agent on which any and all legal process may be served in any such
action, suit or proceeding brought in any Federal or State court located in New
York County in the City of New York. The Borrower agrees that service of process
in respect of it upon such agent, together with written notice of such service
given to it in the manner provided in Section 12.11 hereof, shall be deemed to
be effective service of process upon it in any such action, suit or proceeding.
The Borrower agrees that the failure of such agent to give notice to it of any
such service shall not impair or affect the validity of such service or any
judgment rendered in any action, suit or proceeding based thereon. If for any
reason such agent shall cease to be available to act as such, the Borrower
agrees to designate a new agent in New York County in the City of New York, on
the terms and for the purposes of this Section 12.16. Nothing herein shall be
deemed to limit the ability of the Administrative Agent or any Senior Facility
Lender to serve any such legal process in any other manner permitted by
applicable law or to obtain jurisdiction over the Borrower or bring actions,
suits or proceedings against them in such other jurisdictions, and in such
manner, as may be permitted by applicable law.


                                       74



     12.17 Arbitration.

     (a) Notwithstanding Section 12.16, any dispute regarding (i) the occurrence
of an Event of Political Force Majeure or (ii) the modification of the minimum
insurance requirements set forth in Appendix II shall be determined by
arbitration between the Borrower, on the one hand, and Senior Facility Lenders
on the other hand, in accordance with the UNCITRAL Arbitration Rules in effect
on the date the arbitration is commenced. Such arbitration shall be the
exclusive method for resolution of the dispute, and the determination of the
arbitrators shall be final and binding (except to the extent there exist grounds
for modification, vacatur, remand, nonenforcement or similar judicial action
respecting an award under the applicable laws governing the recognition or
enforcement of arbitral awards) on the Borrower and all Senior Facility Lenders.
The MPA Parties agree that, subject to those laws, they will give conclusive
effect to the arbitrators' determination and award and that judgment thereon may
be entered by any court having jurisdiction. The arbitral tribunal's authority,
if any, to determine its own jurisdiction does not affect the competent court's
power to review the arbitration award (including as to matters of the arbitral
tribunal's assertion of jurisdiction); nor shall such authority by the arbitral
tribunal deprive an enforcement court of the authority to review the arbitral
tribunal's assertion of jurisdiction. Each MPA Party shall bear its own costs in
any such arbitration, provided that, if the arbitral tribunal concludes that any
MPA Party shall have acted unreasonably it may, in its discretion, award costs
against such MPA Party.

     (b) The number of arbitrators shall be three, each of whom shall be
disinterested in the dispute or controversy and shall be impartial with respect
to all parties hereto and independent thereof. Within 30 days of the initiation
of the arbitration, the Borrower and the Administrative Agent (acting upon
instructions from the Majority Facility Lenders) shall each appoint one
arbitrator and the third arbitrator, who shall serve as the chair of the
arbitral tribunal, shall be appointed in accordance with the UNCITRAL
Arbitration Rules in effect on the date the arbitration is commenced. Should the
services of an appointing authority be necessary, the appointing authority shall
be the American Arbitration Association.

     (c) The place of arbitration shall be New York, New York, United States of
America. The arbitration shall be conducted in the English language and any
documents or portions thereof presented at such arbitration in a language other
than English shall be accompanied by an English translation thereof. The
arbitrators shall give effect insofar as possible to the desire of the parties
hereto that the dispute or controversy be resolved in accordance with good
commercial practice. The arbitrators shall decide such dispute in accordance
with the law of the State of New York, without regard to the conflicts of law
principles thereof, provided that the arbitration and this arbitration agreement
shall be governed by Title 9 (Arbitration) of the United States Code.


                                       75



     (d) The MPA Parties agree that it is of paramount importance that disputes
subject to this agreement to arbitrate be resolved expeditiously, and they
therefore charge the arbitral tribunal to schedule submissions and otherwise
conduct the proceedings in a manner designed to reach a final award as quickly
as possible consistent with the opportunity for the tribunal to fully inform
itself and the right of the MPA Parties to be fully heard.

     (e) If a Lead Arbitration proceeding is commenced under clause (a) of this
Section with respect to a dispute regarding the occurrence, continuance or
cessation of a given Event of Political Force Majeure, and if, at any time,
there shall also be pending a Parallel Arbitration with respect to a dispute
regarding the occurrence, continuance or cessation of the same Event of
Political Force Majeure, the Lead Arbitration shall have priority and the
parties shall take (and shall take all steps within their control to cause the
parties to the Parallel Arbitration to take) all reasonable steps to obtain a
stay of the Parallel Arbitration, which stay shall remain in effect pending the
issuance of any award or awards in the Lead Arbitration and, further, pending
conclusion of any judicial proceedings to enforce, vacate, modify, or remand any
award or awards as provided by law. Subject to the conclusion of those judicial
proceedings, if any, and the rights of the parties to the Lead Arbitration to
contest any arbitral award or its enforcement as provided by law, any arbitral
award entered in the Lead Arbitration shall be dispositive of any dispute
regarding the occurrence, continuance or cessation of the Event of Political
Force Majeure that was the subject of the Parallel Arbitration and the tribunal
in the Parallel Arbitration shall enter into an award determinative between the
MPA Parties in accord with the determination in the Lead Arbitration.

     12.18 No Trial by Jury. Each party hereto hereby waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.

     12.19 Amendments and Waivers.

     (a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) Borrower, (ii) the Administrative Agent, acting in accordance with Section
10.01 and (iii) with respect to any amendment, supplement or modification that
modifies any provision of this Agreement in a manner that adversely affects any
rights of the Administrative Agent hereunder or enlarges its duties hereunder,
the Administrative Agent.

     (b) No waiver by any party hereto of any of its rights, powers and
privileges under this Agreement shall be effective other than pursuant to a
written instrument executed by the Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Facility
Lenders can be executed by the Administrative Agent acting in accordance with
Section 10.01.


                                       76



     12.20 Senior Facility Lenders' Credit Decisions.

     (a) Each Senior Facility Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Senior Facility
Lender and based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Senior Facility Lender also acknowledges that it shall, independently and
without reliance upon the Administrative Agent or any other Senior Facility
Lender based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under any Financing Document.

     (b) No implied representation, warranty or covenant of the Borrower shall
be read into this Agreement other than as expressly set forth herein.

     12.21 Payment of Expenses.

     (a) The Borrower shall on the Closing Date reimburse to the Senior Facility
Lenders all the expenses set forth in their respective Senior Facility Loan
Agreement.

     (b) Without limiting the obligations of the Borrower under clause (a)
above, the Borrower agrees (i) to pay or reimburse each Senior Facility Lender
for all of its reasonable out-of-pocket costs and expenses incurred in
connection with the negotiation, preparation, execution, delivery, waiver or
modification of this Agreement and any other Financing Document and any other
documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including,
without limitation, any documentary taxes and the reasonable fees, disbursements
and other charges of external counsel to such Senior Facility Lender, the
Independent Engineer and the Insurance Consultant, and (ii) to pay or reimburse
each Senior Facility Lender for all its reasonable costs and expenses incurred
in connection with any amendment, supplement or modification to, or waiver in
respect of this Agreement or any other Financing Document, or its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement and any such other Financing Documents, including,
without limitation, the reasonable fees, disbursements and other charges of
external counsel, provided in each case that such Senior Facility Lender shall
first have provided the Borrower with a receipt and supporting documentation
certifying the amount of such out-of-pocket costs and expenses and that the
relevant amounts shall be due and payable 30 days thereafter. The agreements in
this Section shall survive the termination of this Agreement, provided that no
claims shall be made by any Senior Facility Lender under this clause (b) after
the first anniversary of the termination of this Agreement and repayment of the
Advances and all other amounts payable hereunder. Notwithstanding the foregoing,
the Borrower shall have no obligation to indemnify any Senior Facility Lender
against any losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, costs, disbursements, or expenses arising out of the failure
of such


                                       77



Senior Facility Lender upon satisfaction of all conditions set forth herein to
the Lenders' obligation to lend, to disburse the amount required to be disbursed
hereunder.

     (c) The Borrower shall indemnify the Administrative Agent and each Senior
Facility Lender, and each Related Party of any of the foregoing Persons (each an
"Indemnitee") from, and hold each Indemnitee harmless against, any and all
losses, claims, damages, liabilities and related expenses (other than Excluded
Taxes), including the reasonable and documented fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of the Financing Documents, the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) any Senior
Facility Loans or the use of the proceeds therefrom or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are incurred by reason
of the negligence or willful misconduct of such Indemnitee and, provided further
that the Borrower shall have no obligation to indemnify any Senior Facility
Lender for payment of any premiums or standby fees for insurance coverage under
the Hermes guarantee under the KfW Loan Agreement or under any guarantee
provided by JBIC related to the Senior Facility Loans made under the JBIC Loan
Agreement or for any other amount that results from the default, action or
inaction of any Senior Facility Lender or otherwise pursuant to the section of
such guarantees that imposes exclusions or reductions in coverage for actions or
failure to act by one or more Senior Facility Lenders. The agreements in the
foregoing clause shall survive the termination of this Agreement.

     (d) Without limiting the generality of the foregoing, the Borrower will
indemnify each Indemnitee from, and hold each of them harmless against, any
losses, liabilities, claims, damages or expenses described in the preceding
sentence (excluding any loss, liability, claim, damage or expense incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified) arising under any Environmental Law as a result of the past,
present or future operations of the Borrower (or any predecessor in interest to
the Borrower) or the environmental contamination of any site or facility owned,
operated or leased at any time by the Borrower (or any such predecessor in
interest) in connection with the Business, or any Release or threatened Release
of any Hazardous Materials by the Borrower (or any such predecessor in interest)
at or from any such site or facility, excluding any such loss, liability, claim,
damage or expense arising as a result of operations, environmental contamination
or any Release or threatened Release that shall occur during any period when the
Indemnitee or other representative of the Senior Facility Lenders shall be in
possession of or controlling any such site or facility following the exercise by
the Appointed Parties or any Senior Facility Lender or other representative of
the Senior Facility Lenders of any


                                       78



of its rights and remedies hereunder or under any of the Financing Documents,
but including any such loss, liability, claim, damage or expense arising as a
result of operations, environmental contamination or any such Release or
threatened Release occurring during such period that is caused by, is a
continuation of or constitutes conditions previously in existence, or of
practices employed by the Borrower, at such site or facility. The agreements in
the foregoing clause shall survive the termination of this Agreement.

     (e) Borrower shall have no obligation to pay any and all fees payable to
any Senior Facility Lender under any Senior Facility Lender Financing Document
and any related fee letter unless and until the Borrower has received evidence
that the Hermes Guarantee has been issued.

     12.22 Conflicts. In case of any conflict or inconsistency between this
Agreement and any other Senior Facility Lenders Financing Document or any other
letter agreement between Borrower and any Senior Facility Lender, this Agreement
shall control.

     12.23 No Partnership. Nothing contained in this Agreement and no action by
any of the parties hereto is intended to constitute or shall be deemed to
constitute among such parties a partnership, association, joint venture or other
entity.

     12.24 No Immunity. To the extent that any MPA Party has or hereafter may
acquire any immunity (sovereign or otherwise), from any legal action, suit or
proceedings, from jurisdiction of any court or from set-off or any legal process
(whether service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to
itself or any of its property, such MPA Party hereby irrevocably waives and
agrees not to plead or claim such immunity in respect of its obligations under
this Agreement or any other Financing Documents or the subject matter hereof or
thereof (including, without limitation, any obligation for the payment of
money). The MPA Parties hereby agree that the waivers set forth in this Section
12.24 shall have the fullest effect permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States, as amended, and are intended to be
irrevocable and not subject to withdrawal for purposes of such Act. The
foregoing waiver shall constitute a present waiver of immunity at any time that
any action is initiated against such MPA Party with respect to this Agreement.

     12.25 Reinstatement. This Agreement shall automatically be reinstated if
and to the extent that for any reason any payment by or on behalf of the
Borrower in respect of the Senior Facility Loans Obligations is rescinded or
must otherwise be restored to Borrower or the Person that made such payment on
the Borrower's behalf by any holder of the Senior Facility Loans Obligations,
whether as a result of any proceedings in bankruptcy or reorganization or
otherwise, and, without duplication of any other indemnification under any
Financing Document, the Borrower shall indemnify the


                                       79



Administrative Agent and each Senior Facility Lender on demand for all
reasonable and documented costs and expenses (including reasonable and
documented fees of counsel) incurred by the Administrative Agent or such Senior
Facility Lender in connection with such rescission or restoration.

                  [Remainder of page intentionally left blank]


                                       80



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed.

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By: /s/ Cristian Moran
                                            ------------------------------------
                                        Name: Cristian Moran
                                        Title: Attorney in Fact


                                        JAPAN BANK FOR INTERNATIONAL COOPERATION


                                        By: /s/ Akira Ogawa
                                            ------------------------------------
                                        Name: Akira Ogawa
                                        Title: Director General
                                               Energy and Natural Resources
                                               Finance Department


                                        SUMITOMO MITSUI BANKING CORPORATION


                                        By: /s/ Takashi Shimahara
                                            ------------------------------------
                                        Name: Takashi Shimahara
                                        Title: Joint General Manager
                                               Structured Finance Department


                                        THE BANK OF TOKYO-MITSUBISHI, LTD.


                                        By: /s/ Hiroaki Makino
                                            ------------------------------------
                                        Name: Hiroaki Makino
                                        Title: Senior Manager
                                               Structured Finance Division


                                       81



                                        KfW


                                        By: /s/ Wolfgang Behler
                                            ------------------------------------
                                        Name: Wolfgang Behler
                                        Title: First Vice President


                                        By: /s/ Stephan Pueschel
                                            ------------------------------------
                                        Name: Stephan Pueschel
                                        Title: Senior Project Manager


                                        CALYON NEW YORK BRANCH


                                        By: /s/ Georges Romano
                                            ------------------------------------
                                        Name: Georges Romano
                                        Title: Managing Director


                                        By: /s/ Samuel Sherman
                                            ------------------------------------
                                        Name: Samuel Sherman
                                        Title: Director


                                        THE ROYAL BANK OF SCOTLAND PLC


                                        By: /s/ Gregor Hamilton
                                            ------------------------------------
                                        Name: Gregor Hamilton
                                        Title: Associate Director


                                        THE BANK OF NOVA SCOTIA


                                        By: /s/ Michael K. Eddy
                                            ------------------------------------
                                        Name: Michael K. Eddy
                                        Title: Director-Mining


                                        By: /s/ Alexander Mihailovich
                                            ------------------------------------
                                        Name: Alexander Mihailovich
                                        Title: Associate


                                       82



                                        MIZUHO CORPORATE BANK, LTD.


                                        By: /s/ Masatoshi Abe
                                            ------------------------------------
                                        Name: Masatoshi Abe
                                        Title: Senior Vice President


                                        THE ADMINISTRATIVE AGENT

                                        CALYON NEW YORK BRANCH,
                                        as Administrative Agent


                                        By: /s/ Samuel Sherman
                                            ------------------------------------
                                        Name: Samuel Sherman
                                        Title: Director


                                        By: /s/ Ted Vandermel
                                            ------------------------------------
                                        Name: Ted Vandermel
                                        Title: Managing Director


                                       83



                                   Schedule A

                                Committed Amounts



                                          Stand-By Committed    Aggregate Committed
                 Base Committed Amount         Amount                Amount
                 ---------------------   -------------------   --------------------
                                                      
JBIC Tranche A    U.S.$173.250 million            0            U.S.$173.250 million
JBIC Tranche B    U.S.$ 74.250 million            0            U.S.$ 74.250 million
KfW               U.S.$ 22.500 million            0            U.S.$ 22.500 million
CALYON            U.S.$ 22.500 million   U.S.$22.500 million   U.S.$ 45.000 million
RBS               U.S.$ 22.500 million   U.S.$22.500 million   U.S.$ 45.000 million
SC                U.S.$ 22.500 million   U.S.$22.500 million   U.S.$ 45.000 million
MIZUHO            U.S.$ 22.500 million   U.S.$22.500 million   U.S.$ 45.000 million




                                   Schedule B

                               Repayment Schedule



                           Scheduled Repayment
      Payment Dates             Percentage
      -------------        -------------------
                        
First Payment Date                6.25%
Second Payment Date               6.25%
Third Payment Date                6.25%
Fourth Payment Date               6.25%
Fifth Payment Date                6.25%
Sixth Payment Date                6.25%
Seventh Payment Date              6.25%
Eighth Payment Date               6.25%
Ninth Payment Date                6.25%
Tenth Payment Date                6.25%
Eleventh Payment Date             6.25%
Twelfth Payment Date              6.25%
Thirteenth Payment Date           6.25%
Fourteenth Payment Date           6.25%
Fifteenth Payment Date            6.25%
Sixteenth Payment Date            6.25%




                                   Schedule C

                                Drawdown Schedule

                                Drawdown Schedule



                 DRAWDOWN AMOUNT
                 ---------------
              
November 2005          25.0
December 2005
January 2006
February 2006
March 2006            112.5
April 2006
May 2006
June 2006              87.5
July 2006
August 2006
September 2006        112.5
October 2006
November 2006
December 2006
January 2007          112.5
February 2007
March 2007




                                   Schedule D

                         Description of Sulfide Project

     The project consists of an expansion of the current open pit mine, new
primary sulfide mill and concentrator, new tailing storage facility and
ancillary facilities to mine and process the primary sulfide ore and produce
copper and molybdenum concentrates. The process facilities include three stage
crushing, ball mill comminution, rougher flotation, and two stages of cleaner
flotation to produce bulk copper-molybdenum concentrate. Differential flotation
of the bulk concentrate produces separate copper and molybdenum concentrates,
both of which are dewatered by thickening and filtration. The copper and
molybdenum concentrates are loaded onto ships for shipment (or alternatively
loaded onto trucks for transport) to smelting and molybdenum processing
facilities. The process tailing remaining after flotation are separated to
produce suitable material for construction of an embankment for the retention of
the balance of the tailing material. Major operating units are expected to be
substantially as set forth below or with such substitutions as deemed
substantially equivalent by the Borrower:

     A.   MINE

     Mining is accomplished by conventional open-pit methods and consists of an
expansion of the leach mining operation. The equipment fleet for the leach
operations has been augmented to meet the demands of both the leaching and
sulfide operations. The fleet consists of shovels, diesel rotary blasthole
drills, haul trucks, and support equipment to mine approximately 280,000
tonnes-per-day to sustain both primary sulfide milling and oxide & secondary
sulfide leach operations.

     B.   PROCESS PLANT

     The process facilities treat about an average of 108,000 tonnes-per-day of
primary sulfide ore to produce separate copper and molybdenum concentrates by
milling and differential flotation.

     The major operating units are as follows:

     -    primary crushing

     -    secondary cone crushing, tertiary HPGR crushing

     -    ball mill grinding

     -    rougher-scavenger flotation



     -    concentrate regrind

     -    cleaner flotation

     -    concentrate thickening

     -    molybdenum recovery by multi-stage differential flotation

     -    molybdenum concentrate filtration and drying

     -    copper concentrate thickening

     -    copper concentrate filtration

     -    tailing thickening

     C.   RECLAIM AND FRESH WATER SUPPLY

     The water management system consists of the following items:

     -    A tailing water reclaim system consisting of barge mounted pumps to
          return water from the tailing impoundment to the concentrator for
          reuse.

     -    A sump located downstream of the tailing impoundment to collect water
          deposited from the tailing underflow and any seepage and return this
          water to the tailing impoundment.

     -    A fresh water pumping and piping system designed to supply water to
          the concentrator and leaching operations.

     D.   TAILINGS MANAGEMENT

     -    The tailing storage facility consists of a rock fill starter dam
          capable of being raised in multiple lifts to an ultimate embankment
          height of about 260 meters. A tailing distribution system consisting
          of a gravity pipeline, cyclone station and distribution pipelines.

     E.   POWER SUPPLY

     Power for the new plant is provided via a new 220 kV feeder from the
existing Socabaya substation connected by a transmission line of approximately
9.6 km to the main plant site substation.


                                        2



                                   Schedule E

                                Tax Certification

_______________________, 2005

Messrs.
SOCIEDAD MINERA CERRO VERDE S.A.A.
ATN.: (BORROWER'S LEGAL REPRESENTATIVE)
(BORROWER'S ADDRESS)
Peru

                                   "AFFIDAVIT"

Dear Sirs,

We hereby represent that _________________________, a Bank incorporated under
the laws of ___________________, acting in its capacity of ________________, has
made available to SOCIEDAD MINERA CERRO VERDE S.A.A. a loan facility with the
following characteristics:



BORROWER:                         SOCIEDAD MINERA CERRO VERDE S.A.A.
- ---------                         ----------------------------------
                               
AGENT:
PURPOSE:
FACILITY TYPE:
AVAILABILITY:
ADVANCE TERM:
AMOUNT:
INTEREST:
INTEREST PERIOD:
SECURITY:
INSTALLMENTS /PAYMENT SCHEDULE:


To our knowledge, this transaction is not hiding a loan between economically
related parties.

This certification is being issued by an authorized officer of [Bank's name] and
upon request by Sociedad Minera Cerro Verde S.A.A.

Sincerely yours,


- -------------------------------------
(SIGNATURE)
(BANK'S NAME)
(NAME OF LEGAL REPRESENTATIVE)



                                   Schedule F

                                   Tax Matters

Certifications issued by Authorized Officers of JBIC shall confirm the
following:

- -    JBIC is a governmental financial institution of Japan which has among its
     objectives providing overseas investment loans to companies in developing
     countries in which Japanese companies invest; and

- -    JBIC has agreed, in accordance with the Japan Bank for International
     Cooperation Law and institutional objectives, to provide a credit facility
     to the Borrower, which is invested in by Japanese companies and exports a
     certain portion of its mining products to Japan, for purposes of developing
     and promoting mining activities in Peru to be carried out by the Borrower.

Certifications issued by Authorized Officers of KfW shall confirm the following:

- -    KfW is majority-owned by the German government and has among its objectives
     granting developing loans to companies in developing countries; and

- -    KfW has agreed, in accordance with its Bylaws and institutional objectives,
     to grant a credit facility to the Borrower for purposes of developing and
     promoting mining activities in Peru to be carried out by the Borrower.



                           DISCLOSURE SCHEDULES TO THE

                         MASTER PARTICIPATION AGREEMENT


                                        1



                                                                   SCHEDULE 6.02

                             BORROWER CAPITALIZATION

The capital stock of the borrower is divided as follows:



SHAREHOLDER        STOCK      PARTICIPATION
- -----------     -----------   -------------
                        
Buenaventura     63,833,717       18.24%
Sumitomo         73,511,763       21.00%
Cyprus Climax   187,500,306       53.56%
Others           25,210,226         7.2%
TOTAL           350,056,012      100.00%



                                        2



                                                                SCHEDULE 6.03(C)

                   COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS

                      See Schedule 6.06 ("Labor Matters").


                                        3



                                                                SCHEDULE 6.03(D)

                      CORE PERUVIAN GOVERNMENTAL APPROVALS

     PART I - OBTAINED CORE PERUVIAN GOVERNMENTAL APPROVALS

- -    Environmental Impact Study Approval was approved by the General Director of
     Environmental Affairs by the Directorial Resolution No. 438-2004-MEM/DGAAM
     dated September 27, 2004.

- -    Approval of Beneficiation Concession Expansion and Construction permit by
     the Mining Promotion Director on October 26, 2004. This three-phase-permit
     allows the expansion of the beneficiation concession, and authorizes the
     construction of the concentrator and its ancillary facilities.

- -    Supreme Decree 003-2004-AG that reserves water rights in favor of the
     Borrower dated January 28, 2004.

- -    Permit by the District Municipality of Yarabamba granting Fluor's
     contractor the right to extract materials to produce concrete and other
     construction materials in connection with the construction of the Sulfide
     Project from the Cantera San Jose. This permit was granted by
     Municipality's agreement No. 039-2005-MDVY.

- -    Approval by the Hydrocarbons General Management of the Ministry of Mines of
     liquid fuel usage permits to allow Fluor to use and store liquid fuels for
     the construction of the Sulfide Project. This permit was granted to Fluor
     on September 1, 2005, and resulted in the issuance of the Registration
     number 0009-CDMV-04-2005.

- -    Approval by the General Management of Control of Security Services, Arms
     Control, Munitions and Civil Use of Explosives of the Interior Ministry
     (DICSCAMEC) of the temporary use of explosives by G&M (Fluor's contractor)
     in connection with the construction of the Sulfide Project. This permit was
     granted through Resolution No. 004958 dated August 16, 2005. This
     authorization is valid through October 19, 2005.

- -    Authorization granted to the Borrower to change and construct a minor
     modification to the Department's road that leads to the Mine. This permit
     was issued by the Regional Manager of the Regional Government of Arequipa
     through official Communication No 787-2005-GRA-pr/GGR dated July 20, 2005.


                                       4



- -    Contract signed between the Borrower and the Regional Government of
     Arequipa for the construction of the Tiabaya - Uchumayo Bridge on May 18,
     2005. The Regional Government is responsible for building the bridge,
     obtaining all permits and licenses. The Borrower has agreed to contribute
     material and services.

     PART II - NOT YET OBTAINED CORE PERUVIAN GOVERNMENTAL APPROVALS

- -    Operation Permit, to be obtained once the construction is finished. This
     permit is the third phase of the approval of the beneficiation concession
     expansion and the construction permit, and can be granted by the Ministry
     of Energy and Mines after completion of the construction and inspection
     process.

- -    Approval of the Closure Plan for the Mines and the Sulfide Project by the
     Ministry of Energy and Mines. Current legislation requires the submission
     of the Closure Plan by August 14, 2006.

- -    Approval of the Agriculture Department and Regional Direction of
     Agriculture in Arequipa for the Borrower's plan to expand the capacity of
     its water supply infrastructure in connection with the Sulfide Project. A
     construction permit from the Municipality of Uchumayo may also be required.

- -    Issuance of Water License by the Technical Administration of the River
     Chili District granting the Borrower additional water rights necessary for
     the Sulfide Project. This license can be issued once Pillones dam and the
     Operation Plan of the Chili River System is finished, according to the
     terms of Supreme Decree No 003-2004-AG dated January 28, 2004.

- -    Approval of the Environmental Impact Study for the 220 KV line by the
     Ministry of Energy and Mines.

- -    Approval by the Electrical Direction of the Ministry of Energy and Mines of
     the concession for the 220 KV Transmission Line.

- -    License by the Municipality of Socabaya for the construction of the
     sub-station of the 220 KV Transmission Line and the Transmission Line
     itself located inside the boundaries of the district might be required.


                                       5



- -    Recognition of the easements related to the 220 KV Transmission Line by the
     Electrical General Direction of the Ministry of Energy and Mines.(1)

- -    Approval of modifications to the Mining Operation Certificate issued by the
     General Mining Director of the Ministry of Energy and Mines to authorize
     increased use of explosives by the Borrower in connection with the
     operation of the Sulfide Project.

- -    Approval by the General Management of Control of Security Services, Arms
     Control, Munitions and Civil Use of Explosives of the Interior Ministry
     (DICSCAMEC) for the increased use of explosives in connection with the
     operation of the Sulfide Project.

- -    Approval by the Hydrocarbons General Management of the Ministry of Energy
     and Mines of the modification of the current liquid fuel usage permit to
     allow the Borrower to use and store liquid fuels for the operation of the
     Sulfide Project.

- -    License from the Ministry of Transportation and Communications for the
     Borrower's use of radio frequencies in connection with the Sulfide Project.

- -    Permit from the Ministry of Transportation and Communications for the
     Borrower to upgrade the road that connects the mine site with the
     Panamericana road (that eventually connects with the road to Matarani
     Port).

- -    Permit from the Regional Health Direction of the Health Ministry in
     Arequipa for the operation of a new first aid center for the Sulfide
     Project.

- -    Approval by the Mining Environmental Direction of the Ministry of Energy
     and Mines of an amendment to the Environmental Impact Study for the Sulfide
     Project regarding the bimodal transport of concentrates to the Matarani
     port. In the event that additional modifications to the Sulfide Project are
     made, corresponding modifications to the Environmental Impact Study may be
     required.

- -    License from the General Direction of Environmental Health under Ministry
     of Health (DIGESA) regarding the new potable (drinking) water system
     required for the operations.

- ----------
(1)  SMCV is aware of precedents where the recognition of easements by the
     appropriate Peruvian Governmental Authorities has been delayed by months
     or, in certain circumstances, years. The delay in the recognition of such
     easement should not, however, prevent the construction or operation of the
     Transmission Line.


                                        6



- -    License from the General Direction of Environmental Health for the
     operation of waste water system (septic tank) for the administrative
     offices required for the construction and operation of the project.

- -    Approval of the Environmental Impact Study presented by TISUR before the
     Ministry of Transportation regarding the new facilities in the Matarani
     Port.


                                       7



                                                                   SCHEDULE 6.04

                              ENVIRONMENTAL MATTERS

- -    WASTE WATER TREATMENT SYSTEM. On December 17, 2004, the Borrower received a
     notice from the Health General Direction (DIGESA) requesting that the
     Borrower modify its waste water treatment system to comply with the water
     quality standards set forth in Executive Order No 17552 and corresponding
     administrative regulations. DIGESA then suggested that the Borrower should
     apply for a "recycling water authorization". The purpose of asking for a
     "recycling water authorization", even though the Borrower does not recycle,
     is to allow DIGESA to inspect the facilities and to verify that the Mine
     does not have any waste water discharge. This is the only procedure DIGESA
     has to certify that there is no waste water discharge.

- -    FREDICON. FREDICON, a community association, filed two criminal claims
     against the Borrower for failure to water trees planted by FREDICON on the
     Borrower's property and for failure to plant additional trees on its
     property. The first criminal claim was dismissed as unfounded by the Second
     Crime Prevention Prosecutor, but nevertheless forwarded to the Penal
     Prosecutor. The second criminal claim is still pending.

- -    MR. HUMBERTO OLAECHEA FILED A CIVIL CLAIM (ACCION DE AMPARO) AGAINST THE
     BORROWER BEFORE THE 5TH CIVIL COURT OF AREQUIPA, asking the judge to stop
     the works for the change of the pipeline done in the zone near the tunnel
     on the way to the mine. The hearing took place on August 26, 2005.
     Resolution is still pending.

- -    CLAIM FROM HUMBERTO OLAECHEA AGAINST THE BORROWER - Appeal of July 13, 2005
     by Humberto Olaechea Guillen of a prosecutor's decision that Borrower does
     not violate law by failure to water trees (Reg. No 2970).

- -    CLAIM FROM HUMBERTO OLAECHEA AGAINST THE BORROWER- Appeal of July 13, 2005
     by Humberto Olaechea Guillen of a prosecutor's decision that Borrower does
     not violate law by performing work on its water pipeline (Reg. 2911).

- -    PAMA. The Borrower received a notice from the Ministry of Energy and Mines
     that the "Programa de Adecuacion y Manejo Ambiental" ("PAMA") would need to
     be updated in order for it to built a new leaching facility to lixiviate
     the mineral for the cathode production ("Pad 5"). The construction for Pad
     5 was originally planned for 2005 but has been postponed until 2008. The
     Borrower has appealed the notice and has now been informed verbally that
     PAMA does not need to be


                                       8



     amended, but that the Environmental Management Plan to be filed for the
     project will need to include Pad 5. The Borrower is planning to withdraw
     its appeal."


                                       9



                                                                   SCHEDULE 6.05

                                      TAXES

                                      None.


                                       10



                                                                   SCHEDULE 6.06

                                  LABOR MATTERS

     Law No 27942 and related administrative regulations, approved by Supreme
Decree No 010-2003-MIMDES, required employers to implement procedures to
protect employees from sexual harassment by March 2004. The Borrower did not
timely implement the procedures required under these regulation.


                                       11



                                                                   SCHEDULE 6.07

                                LEGAL PROCEEDINGS

JUAN NAVARRO MENDOZA (387-04 AND 383-04) AND OTHERS. On December 3, 2003, Juan
Navarro Mendoza and a group of approximately 20 farmers submitted an application
with the Special Land Titulation Project (PETT) to purchase approximately
105,000 hectares of land located in the Tiabaya 67 mining concession. Under
Peruvian law, PETT is authorized to sell available land, provided that such sale
will not interfere with any third party rights. The Borrower was granted title
to the Tiabaya 67 mining concession in 2000 and this mining concession is
recorded with INACC. PETT has ruled in favor of the Borrower. Despite this, the
farmers have now asked the Borrower through a mediator to pay approximately
US$25,000 in return for vacating the land. Tiabaya 67 is located at the edge of
the Borrower's concessions in the district of Yarabamba.


                                       12



                                                                   SCHEDULE 6.08

                                    CONSENTS

1.   Consent by Fluor Daniel Sucursal del Peru for the collateral assignment of
     the Construction Agreement No. CV12915 signed by and between Fluor Daniel
     Sucursal del Peru and Sociedad Minera Cerro Verde S.A.A., effective as of
     December 14, 2004.

2.   Consent by Fluor Canada Ltd. for the collateral assignment of the
     Engineering Agreement No. CV 12913, dated as of December 14, 2004, between
     the Borrower and Fluor Canada Ltd.

3.   Consent by Terminal Internacional del Sur S.A. (TISUR) for the collateral
     assignment of the contract between TISUR and Sociedad Minera Cerro Verde
     S.A.A. dated December 31, 2004.

4.   Consent by PERURAIL S.A. for the collateral assignment of the contract
     signed by and between PERURAIL S.A. and Sociedad Minera Cerro Verde S.A.A
     on June 11, 2005.

5.   Consent by Transaltisa S.A for the collateral assignment of the Contrato de
     Servicios de Transporte de Catodos de Cobre, Mercaderias y Acido Sulfurico
     between the Borrower and Transaltisa S.A. dated as of June 2, 2003.

6.   Consent by Electroperu for the collateral assignment of the contract signed
     by and between Electroperu and Sociedad Minera Cerro Verde S.A.A. for the
     supply of 46 MW, dated December 31, 2004.

7.   Consent by Electroperu for the collateral assignment of the contract signed
     by and between Electroperu and Sociedad Minera Cerro Verde S.A.A. for the
     supply of 110 MW, dated December 31, 2004.

8.   Consent by Empresa de generacion de Arequipa S.A. (EGASA) for the
     collateral assignment of the contract signed by EGASA and Sociedad Minera
     Cerro Verde S.A.A. dated December 31, 2004.

9.   Consent by the Shareholders for the collateral assignment of the
     Shareholders Agreement among SMM Cerro Verde Netherlands B.V., Sumitomo
     Metal Mining Co., LTD., Sumitomo Corporation, Summit Global Management II
     B.V., Compania de Minas Buenaventura S.A.A., Phelps Dodge Corporation,
     Cyprus


                                       13



     Climax Metals Company, and Sociedad Minera Cerro Verde S.A.A. dated as of
     June 1, 2005.

10.  Consent by Minera Phelps Dodge del Peru for the collateral assignment of
     the Operator's Agreement signed by and between Minera Phelps Dodge del Peru
     and Sociedad Minera Cerro Verde S.A.A. dated June 1, 2005.

11.  Consent by Phelps Dodge Sales Company for the collateral assignment of the
     Supply Agreement by and between Phelps Dodge Sales Company and the Borrower
     effective as of January 1, 2005.

12.  Consent by Sumitomo Metal Mining Co., Ltd. for the collateral assignment of
     the Concentrate Sales Agreement between Sumitomo Metal Mining, Co., Ltd.
     and the Borrower dated as of June 1, 2005, as amended by Amendment No.1
     thereto dated as of September 30, 2005.

13.  Consent by Phelps Dodge Sales Company for the collateral assignment of the
     Concentrate Sales Agreement between Phelps Dodge Sales Company and the
     Borrower dated as of September 30, 2005.

14.  Consent by Phelps Dodge Sales Company for the collateral assignment of the
     Cathodes Sales Agreement between Phelps Dodge Sales Company and the
     Borrower dated as of September 30, 2005.

15.  Consent by Phelps Dodge Corporation for the collateral assignment of the
     Parent Guarantee for the Offtake Agreements between Phelps Dodge
     Corporation and the Borrower dated as of September 30, 2005.

16.  Consent by Phelps Dodge Corporation for the collateral assignment of the
     Parent Guarantee for the Operator's Agreement between Phelps Dodge
     Corporation and the Borrower dated as of September 30, 2005.


                                       14



                                                                   SCHEDULE 6.09

                              FINANCIAL STATEMENTS


                                       15



SOCIEDAD MINERA CERRO VERDE S.A.A.

ESTADOS FINANCIEROS
31 DE DICIEMBRE DEL 2004 Y 31 DE DICIEMBRE DEL 2003


                                       16



SOCIEDAD MINERA CERRO VERDE S.A.A.

ESTADOS FINANCIEROS
31 DE DICIEMBRE DEL 2004 Y 31 DE DICIEMBRE DEL 2003

CONTENIDO

Dictamen de los auditores independientes
Balance general
Estado de ganancias y perdidas
Estado de cambios en el patrimonio neto
Estado de flujos de efectivo
Notas a los estados financieros

S/. = Nuevo sol
US$ = Dolar estadounidense


                                       17



(PRICEWATERHOUSECOOPERS LOGO)                          (80 ANOS EN EL PERU LOGO)

                                         DONGO-SORIA GAVEGLIO Y ASOCIADOS
                                         SOCIEDAD CIVIL
                                         FIRMA MIEMBRO DE PRICEWATERHOUSECOOPERS
                                         Av. Canaval y Moreyra 380
                                         Lima 27, Peru
                                         Apartado 1434-2869
                                         Telfs.:(511)211-6500 411-5800
                                         Fax:(511)442-6522 211-6565

DICTAMEN DE LOS AUDITORES INDEPENDIENTES

2 de febrero del 2005

A los senores Accionistas
Sociedad Minera Cerro Verde S.A.A.

Hemos auditado los balances generales adjuntos de Sociedad Minera Cerro Verde
S.A.A al 31 de diciembre del 2004 y al 31 de diciembre del 2003 y los
correspondientes estados de ganancias y perdidas, de cambios en el patrimonio
neto y de flujos de efectivo por los anos terminados en esas fechas, expresados
en dolares estadounidenses. La preparacion de dichos estados financieros es
responsabilidad de la Gerencia de la Compania. Nuestra responsabilidad consiste
en emitir una opinion sobre estos estados financieros basada en las auditorfas
que efectuamos.

Nuestras auditorfas fueron efectuadas de acuerdo con normas de auditorfa
generalmente aceptadas en el Peru. Tales normas requieren que planifiquemos y
realicemos nuestro trabajo con la finalidad de obtener una seguridad razonable
de que los estados financieros no contienen errores importantes. Una auditoria
comprende el examen, basado en comprobaciones selectivas, de las evidencias que
respaldan los importes y las divulgaciones expuestas en los estados financieros.
Una auditoria tambien comprende la evaluacion de los pincipios de contabilidad
aplicados y de las estimaciones significativas efectuadas por la Gerencia de la
Compania, asi como una evaluacion de la presentacion general de los estados
financieros. Consideramos gue las auditorias efectuadas constituyen una base
razonable para fundamentar nuestra opinion.

En nuestra opinion, los estados financieros antes indicados presentan
razonablemente, en todos sus aspectos significativos, la situacion financiera de
SOCIEDAD MINERA CERRO VERDE S.A.A. al 31 de diciembre del 2004 y al 31 de
diciembre del 2003, los resultados de sus operaciones y sus flujos de efectivo
por los anos terminados en esas fechas, de acuerdo con principios de
contabilidad generalmente aceptados en el Peru.

DONGO-SORIA GAVEGLIO Y ASOCIADOS
Refrendado por


/s/ Luis W. Montero
- -------------------------------------(socio)
Luis W. Montero
Contador Publico Colegiado
Matricula No. 17729

                                      Inscrita en La Partida No. 11028527
                                      Registro de Personas Juridicas de Lima
                                      Capital pagado S/. 1,035,000.00


                                       18



SOCIEDAD MINERA CERRO VERDE S.A.A.

BALANCE GENERAL (NOTAS 1 Y, 2)

ACTIVO



                                                 AL 31 DE DICIEMBRE DEL
                                                 ----------------------
                                                      2004      2003
                                                    -------   -------
                                                     US$000    US$000
                                                        
ACTIVO CORRIENTE
Caja y bancos                                         8,628    28,670
                                                    -------   -------
Inversiones disponibles para la venta (Nota 3)      148,544        --
                                                    -------   -------
Cuentas por cobrar comerciales:
Empresas afiliadas (Nota 4)                           8,848    10,546
Terceros                                                175       131
                                                    -------   -------
                                                      9,023    10,677
Credito fiscal por recuperar                            431       278
Diversas                                                326       378
                                                    -------   -------
                                                      9,780    11,333
                                                    -------   -------
Existencias (Nota 5)                                 25,344    21,642
                                                    -------   -------
Gastos pagados por anticipado                           100       259
                                                    -------   -------
Total del activo corriente                          192,396    61,904

EXISTENCIAS (NOTA 5)                                  3,570     3,175

INMUEBLES, MAQUINARIA Y
EQUIPO, NETO (NOTA 6)                               149,805   153,943

GASTOS DE DESARROLLO
DE MINA (NOTA 7)                                     16,186    17,942

OTROS ACTIVOS                                         2,086     1,983
                                                    -------   -------
                                                    364,043   238,947
                                                    =======   =======


PASIVO Y PATRIMONIO NETO



                                              AL 31 DE DICIEMBRE DEL
                                              ----------------------
                                                   2004      2003
                                                 -------   -------
                                                  US$000    US$000
                                                     
PASIVO CORRIENTE
Cuentas por pagar comerciales                     13,565     6,402
Empresas afiliadas (Nota 4)                          806       357
Tributos por pagar                                30,128         7
Remuneraciones y beneficios
sociales por pagar                                 8,226     1,270
Cuentas por pagar diversas                         1,514       547
                                                 -------   -------
Total del pasivo corriente                        54,239     8,583
                                                 -------   -------
OTROS PASIVOS A LARGO PLAZO
Provision para remediacion y cierre de mina        4,681     4,014
Impuesto a la renta y participacion de los
trabajadores diferidos (Nota 8)                   38,480    32,127
                                                 -------   -------
                                                  43,161    36,141
                                                 -------   -------
INGRESOS DIFERIDOS                                 1,032     1,275
                                                 -------   -------
PATRIMONIO NETO (NOTA 10)
Capital social                                   122,747   122,747
Capital adicional                                    194       194
Reserva legal                                      9,056     4,728
Resultados acumulados                            133,614    65,279
                                                 -------   -------
                                                 265,611   192,948
                                                 -------   -------
SITUACION TRIBUTARIA (NOTA 11)
                                                 -------   -------
                                                 364,043   238,947
                                                 =======   =======


Las notas que se acompanan forman parte de los estados financieros.


                                       19



SOCIEDAD MINERA CERRO VERDE S.A.A.

ESTADO DE GANANCIAS Y PERDIDAS (NOTAS 1 Y 2)



                                                        POR EL ANO TERMINADO
                                                        EL 31 DE DICIEMBRE DEL
                                                        ----------------------
                                                           2004       2003
                                                         --------   --------
                                                          US$000     US$000
                                                              
Ventas netas                                              260,782    156,724
Costo de ventas (Nota 12)                                (119,482)  (103,962)
                                                         --------   --------
Utilidad bruta                                            141,300     52,762
                                                         --------   --------
Gastos de ventas                                           (1,089)      (601)
                                                         --------   --------
Utilidad de operacion                                     140,211     52,161
                                                         --------   --------
Otros (gastos) ingresos:
Gastos financieros, neto (Nota 13)                           (827)    (2,151)
Gastos de exploracion                                          --        (75)
Varios, neto                                                  (31)     6,939
                                                         --------   --------
                                                             (858)     4,713
                                                         --------   --------
Utilidad antes de participacion de los trabajadores e
impuesto  a la renta                                      139,353     56,874
Participacion de los trabajadores:
- - Corriente (Nota 9)                                      (10,075)        --
- - Diferido (Nota 8)                                        (1,427)    (2,726)
Impuesto a la renta:
- - Corriente (Nota 11-b)                                   (35,262)    (1,795)
- - Diferido (Nota 8)                                        (4,926)    (9,078)
                                                         --------   --------
Utilidad neta del ano                                      87,663     43,275
                                                         ========   ========
Utilidad por accion (Nota 14)                            US$0.386   US$0.190
                                                         ========   ========


Las notas que se acompanan forman parte de los estados financieros.


                                       20



SOCIEDAD MINERA CERRO VERDE
S.A.A.

ESTADO DE CAMBIOS EN EL PATRIMONIO NETO (NOTA 10)
POR LOS ANOS TERMINADOS EL 31 DE DICIEMBRE DEL 2004
Y EL 31 DE DICIEMBRE DEL 2003



                                            CAPITAL    CAPITAL    RESERVA   RESULTADOS
                                            SOCIAL    ADICIONAL    LEGAL    ACUMULADOS    TOTAL
                                           --------   ---------   -------   ----------   -------
                                           US$000       US$000     US$000     US$000      US$000
                                                                          
Saldos al 1 de enero del 2003               122,941       --       3,213      22,839     148,993
Transferencia al capital adicional             (194)     194          --          --          --
Transferencia a la reserva legal                 --       --       1,515      (1,515)         --
Ajuste por remediacion y cierre de mina          --       --          --          92          92
Cancelacion del contrato de cobertura de
intereses, neto de su efecto tributario          --       --                     588         588
Utilidad neta del ano                            --       --          --      43,275      43,275
                                            -------      ---       -----     -------     -------
Saldos al 31 de diciembre del 2003          122,747      194       4,728      65,279     192,948
Transferencia a la reserva legal                 --       --       4,328      (4,328)         --
Distribucion de dividendos                       --       --          --     (15,000)    (15,000)
Utilidad neta del ano                            --       --          --      87,663      87,663
                                            -------      ---       -----     -------     -------
Saldos al 31 de diciembre del 2004          122,747      194       9,056     133,614     265,611
                                            =======      ===       =====     =======     =======


Las notas que se acompanan forman parte de los estados financieros.


                                       21



SOCIEDAD MINERA CERRO VERDE S.A.A.

ESTADO DE FLUJOS DE EFECTIVO (NOTAS 2 Y 16)



                                                                          POR EL ANO TERMINADO
                                                                         EL 31 DE DICIEMBRE DEL
                                                                         ----------------------
                                                                              2004      2003
                                                                            -------   -------
                                                                             US$000    US$000
                                                                                 
FLUJOS DE EFECTIVO DE LAS ACTIVIDADES DE OPERACION
Utilidad neta del ano                                                        87,663    43,275
Ajustes al resultado neto que no afectan los
flujos de efectivo de las actividades de operacion:
Depreciacion                                                                 20,824    18,503
Amortizacion de gastos de desarrollo de mina                                  1,756     1,733
Provision para remediacion y cierre de mina                                     379       501
Amortizacion de otros activos                                                   185        --
Ajuste por remediacion y cierre de mina                                          --     1,983
Impuesto a la renta y participacion de los trabajadores diferidos             6,353    11,804
Aumento (disminucion) en el flujo de operaciones por variaciones netas
en activos y pasivos:
Cuentas por cobrar comerciales                                                1,654    (2,864)
Otras cuentas por cobrar                                                       (101)      830
Existencias                                                                  (4,097)  (10,017)
Gastos pagados por anticipado y otros activos                                   159    (1,141)
Cuentas por pagar comerciales                                                 7,163     1,316
Tributos por pagar                                                           30,121        (7)
Remuneraciones y beneficios sociales                                          6,956       236
Cuentas por pagar diversas                                                    1,416      (536)
Ingresos diferidos                                                             (243)     (243)
                                                                            -------   -------
Efectivo neto provisto por las actividades de operacion                     160,188    65,373
                                                                            -------   -------

FLUJOS DE EFECTIVO DE LAS ACTIVIDADES DE INVERSION
Inversiones en obras en curso                                               (16,772)   (5,146)
Ingresos por venta de maquinaria y equipo y/o ajustes                            86        --
                                                                            -------   -------
Efectivo neto aplicado a las actividades de inversion                       (16,686)   (5,146)
                                                                            -------   -------

FLUJOS DE EFECTIVO DE LAS ACTIVIDADES DE FINANCIAMIENTO
Prestamos bancarios, neto                                                        --   (33,000)
Pago de dividendos                                                          (15,000)       --
                                                                            -------   -------
Efectivo neto aplicado a las actividades de financiamiento                  (15,000)  (33,000)
                                                                            -------   -------
Aumento neto del efectivo y equivalente de efectivo                         128,502    27,227
Saldo del efectivo y equivalente de efectivo al inicio del ano               28,670     1,443
                                                                            -------   -------
Saldo del efectivo y equivalente de efectivo al final del ano               157,172    28,670
                                                                            =======   =======
Las notas que se acompanan forman parte de los estados financieros.



                                       22



     SOCIEDAD MINERA CERRO VERDE S.A.A.

     NOTAS A LOS ESTADOS FINANCIEROS
     31 DE DICIEMBRE DEL 2004 Y 31 DE DICIEMBRE DEL 2003

1    ACTIVIDAD ECONOMICA

     SOCIEDAD MINERA CERRO VERDE S.A.A. (en adelante la Compania), subsidiaria
     de Cyprus Climax Metals Co. (Cyprus) propietaria del 82.48% de las acciones
     representativas de su capital social, se constituyo en el Peru el 20 de
     agosto de 1993 como resultado de la division de Empresa Minera del Peru
     (Minero Peru) encontrandose sus actividades reguladas por la Ley General de
     Mineria. Su domicilio legal es Av. Alfonso Ugarte No.304 - Arequipa. Su
     actividad principal es la extraccion, produccion y comercializacion de
     cobre en sus yacimientos ubicados al suroeste de la ciudad de Arequipa. La
     Compania cotiza sus acciones en la Bolsa de Valores de Lima.

     El personal empleado por la Compania para desarrollar sus actividades al 31
     de diciembre del 2004 ascendio a 665 funcionarios y empleados (603 al 31 de
     diciembre del 2003).

     Los estados financieros al 31 de diciembre del 2004 seran presentados a
     consideracion de la Junta General de Accionistas en los plazos establecidos
     por ley. En opinion de la Gerencia y el Directorio de la Compania, estos
     estados financieros seran aprobados sin modificaciones. Los estados
     financieros al 31 de diciembre del 2003 fueron aprobados por la Junta
     General de Accionistas del 14 de abril del 2004.

     PLANTA DE SULFUROS

     El 27 de setiembre del 2004, a traves de la Resolucion Directoral
     438-2004-MEM/AAM emitida por el Ministerio de Energia y Minas, se aprobo el
     Estudio de Impacto Ambiental del Proyecto Sulfuros Primarios. El 6 de
     octubre del 2004 el Directorio de Phelps Dodge Corporation, principal
     accionista de Cyprus, aprobo la construccion de la Planta de Sulfuros
     Primarios. El 28 de octubre del 2004 la Compania recibio la notificacion
     del Ministerio de Energia aprobando el proyecto.

     La inversion en este proyecto se estima en US$850 millones y sera
     financiado con recursos propios y con financiamiento de terceros. Se estima
     que la construccion de la Planta se llevara a cabo en dos anos, y se espera
     alcanzar los maximos niveles de produccion en el primer semestre del 2007.
     La produccion de cobre fino en promedio alcanza 90,000 TM al ano, y se
     estima que la inversion en este proyecto incrementara la produccion a
     260,000 TM por ano.

     Al 31 de diciembre del 2004, la Compania ha suscrito compromisos con
     proveedores de equipos y de servicios por un monto de aproximadamente US$40
     millones.


                                       23



     Pagina 2

2    PRINCIPIOS Y PRACTICAS CONTABLES

     Los estados financieros se preparan de acuerdo con las disposiciones
     legales sobre la materia y los principios de contabilidad generalmente
     aceptados en el Peru. Los principios de contabilidad comprenden
     sustancialmente a las Normas Internacionales de Informacion Financiera
     (NIIF) las que incorporan a las Normas Internacionales de Contabilidad
     (NIC) oficializadas a traves de resoluciones emitidas por el Consejo
     Normativo de Contabilidad. A la fecha de los estados financieros, el
     Consejo Normativo de Contabilidad ha oficializado la aplicacion de las NIC
     de la 1 a la 41 y los pronunciamientos del 1 al 33 del Comite de
     Interpretaciones (SIC).

     Los principios y practicas contables mas importantes que han sido aplicados
     en el registro de las operaciones y la preparacion de los estados
     financieros son los siguientes:

     a)   Preparacion de estados financieros -

     De acuerdo con lo permitido por el Articulo 87 degrees del Codigo
     Tributario los registros contables de la Compania son mantenidos en dolares
     estadounidenses, que corresponde a su moneda de medicion, dado que la
     mayoria de sus transacciones son pactadas, cobradas y pagadas en esa
     moneda. Las transacciones efectuadas en nuevos soles son expresadas al tipo
     de cambio vigente de la fecha en que se realizan.

     b)   Uso de estimaciones contables -

     El proceso de preparacion de los estados financieros requiere que la
     Gerencia de la Compania lleve a cabo estimaciones y supuestos para la
     determinacion de los saldos de los activos y pasivos, el monto de las
     contingencias y el reconocimiento de los ingresos y gastos. En el caso que
     estas estimaciones y supuestos variaran como resultado de cambios en las
     premisas en las que se sustentaron, los correspondientes saldos de los
     estados financieros se corrigen en la fecha en la que el cambio en las
     estimaciones y supuestos se produce. Las principales estimaciones
     relacionadas con los estados financieros se refieren a la depreciacion de
     los bienes del activo fijo, la amortizacion de los gastos de desarrollo de
     mina, provisiones para obsolescencia de materiales y suministros, para
     remediacion y cierre de mina y el impuesto a la renta y la participacion de
     los trabajadores (corrientes y diferidos).

     c)   Instrumentos financieros -

     Los instrumentos financieros corresponden a los contratos que dan lugar,
     simultaneamente, a un activo financiero en una empresa y a un pasivo
     financiero o a un instrumento de capital en otra empresa. En el caso de la
     Compania, los instrumentos financieros corresponden a los depositos en
     entidades financieras, inversiones, cuentas por cobrar, cuentas por pagar,
     y hasta el 2003, a instrumentos derivados que corresponden a contratos de
     cobertura de tasas de interes.

     Las inversiones que se mantendran por un periodo de tiempo indefinido, que
     pueden ser vendidas por necesidades de liquidez o cambios en las tasas de
     interes, se clasifican como


                                       24



     Pagina 3

     disponibles para la venta; estas inversiones se muestran como activos no
     corrientes a menos que la Gerencia tenga intencion expresa de mantener la
     inversion por menos de 12 meses contados desde la fecha del balance general
     o a menos que sea necesario venderlas para aumentar el capital operativo de
     la Compania, en cuyo caso se mostraran como activos corrientes. La Gerencia
     determina la clasificacion de sus inversiones en la fecha de su compra y
     evalua tal clasificacion periodicamente.

     Las compras y ventas de inversiones se reconocen en la fecha de la
     negociacion, que corresponde a la fecha en la que la Compania se compromete
     a comprar o vender el activo. El costo de adquisicion incluye los costos
     inherentes de la transaccion. Las inversiones disponibles para la venta son
     subsecuentemente registradas a su valor razonable. Las ganancias y perdidas
     realizadas y no realizadas que surgen de cambios en el valor razonable de
     inversiones disponibles para la venta se incluyen en los resultados del
     periodo en el que se originan.

     El valor razonable es el monto por el que un activo puede ser intercambiado
     entre un comprador y un vendedor debidamente informados, o puede ser
     cancelada una obligacion, entre un deudor y un acreedor con suficiente
     informacion, bajo los terminos de una transaccion de libre competencia. En
     este sentido, en opinion de la Gerencia, los valores en libros de los
     instrumentos financieros al 31 de diciembre del 2004 y al 31 de diciembre
     del 2003 no difieren significativamente de sus valores razonables. Las
     politicas contables sobre el reconocimiento y valuacion de estas partidas
     se revelan en las respectivas politicas contables descritas en esta Nota.

     d) Cuentas por cobrar comerciales -

     Los saldos de las cuentas por cobrar comerciales se registran a su valor
     nominal, neto del estimado de cuentas incobrables determinado sobre la base
     de la revision periodica de los saldos pendientes de cobro que considera,
     entre otros factores, la antiguedad de los saldos por cobrar y la
     viabilidad de su cobranza. Las cuentas incobrables se castigan cuando se
     identifican como tales.

     e) Existencias -

     Las existencias se valorizan al costo de produccion o adquisicion o a su
     valor neto de realizacion, el que resulte menor. La valuacion de las
     existencias se determina a traves de los metodos de ultimas entradas -
     primeras salidas (productos terminados y en proceso) y promedio (materiales
     y suministros). El costo de extraccion de mineral que incluye materiales,
     mano de obra, otros costos directos y gastos generales de produccion y
     excluye los gastos de financiamiento, es asignado a los productos
     terminados (catodos de cobre) y a los productos en proceso.

     El valor neto de realizacion de las existencias es el precio de venta
     estimado en el curso normal de las operaciones del negocio, menos los
     costos necesarios para terminar su produccion y los gastos de ventas. El
     costo de las existencias por recibir ha sido determinado segun el metodo de
     identificacion especifica.


                                       25



     Pagina 4

     f) Inmuebles, maquinaria y equipo -

     Los inmuebles, maquinaria y equipo se registran al costo, excepto por los
     activos adquiridos por Cyprus que se registran a su valor de transferencia
     menos una provision registrada para reducir su valor en libros a su valor
     recuperable estimado.

     Los gastos de mantenimiento y reparacion son cargados al costo de
     produccion cuando se incurren y las renovaciones y mejoras se capitalizan.
     Cuando el valor en libros es mayor que su valor recuperable estimado es
     inmediatamente reducido a su valor recuperable. El costo y la depreciacion
     acumulada de los activos vendidos o retirados se eliminan de sus
     respectivas cuentas y la utilidad o perdida relacionados con activos
     permanentes se afecta al saldo de la depreciacion acumulada y los
     relacionados con activos moviles se afecta a resultados.

     La depreciacion de los inmuebles, maquinaria y equipo se calcula por el
     metodo de unidades producidas en funcion de la vida util de la mina en el
     caso de los activos permanentes y por el metodo de linea recta en el caso
     de los activos moviles. Las tasas anuales de depreciacion utilizadas para
     los activos moviles fluctuan entre 5% y 33%.

     g) Gastos de desarrollo de mina -

     Los gastos de desarrollo de los asientos mineros que, de acuerdo con
     estimaciones de la Gerencia, se estima beneficiaran la produccion en el
     futuro se capitalizan. Los gastos de exploracion de proyectos cuyos
     resultados en el futuro son inciertos se cargan a los resultados cuando se
     incurren. Los costos de desbroce incurridos hasta el 31 de diciembre de
     1999 en la preparacion de la mina se muestran en el rubro gastos de
     preparacion de mina del balance general y se amortizan en funcion del
     mineral extraido. Los costos de desbroce incurridos a partir del ano 2000
     se cargan al costo de produccion.

     h) Deterioro de activos -

     En el caso de ocurrencia de eventos o cambios economicos que indiquen que
     el valor en libros de los activos de vida util prolongada se ha
     deteriorado, la Compania estima su valor recuperable y si es necesario
     reconoce una perdida por deterioro con cargo a los resultados del
     ejercicio. Esta perdida es el monto en el que el valor en libros del activo
     es reducido a su valor recuperable. El valor recuperable de los activos
     corresponde al mayor valor entre el monto neto que se obtendria de su venta
     y su valor en uso. El valor de venta neto corresponde al monto que se
     obtendria de la venta del activo en una transaccion cerrada entre partes no
     relacionadas, el precio de referencia en un mercado activo o el de
     transacciones similares recientes. El valor en uso corresponde al valor
     presente de los flujos futuros estimados que se obtendrian del uso continuo
     del activo y de su disposicion final al termino de su vida util.

     Los supuestos en que se basan los estimados de flujos futuros estan sujetos
     a riesgos e incertidumbres. Cualquier diferencia entre los supuestos y las
     condiciones de mercado y/o el


                                       26



     Pagina 5

     desempeno de la Compania podrian tener un efecto importante en la situacion
     financiera y los resultados de sus operaciones.

     i) Impuesto a la renta -

     El impuesto a la corriente se registra de acuerdo con la legislacion
     vigente (Nota 11).

     El impuesto a la renta diferido se registra por el metodo del pasivo
     reconociendo el efecto de las diferencias temporales que surgen entre la
     base tributaria de los activos y pasivos y su saldo en los estados
     financieros, aplicando la legislacion y la tasa de impuesto promulgadas o
     sustancialmente promulgadas. Las principales diferencias temporales se
     resumen en la Nota 8.

     Impuestos diferidos activos solo se reconocen en la medida que sea probable
     que se dispondra de utilidades gravables futuras contra las que se pueda
     utilizar estos beneficios tributarios.

     j) Provisiones -

     Las provisiones se reconocen cuando la Compania tiene una obligacion
     presente legal o asumida como resultado de hechos pasados, es probable que
     se requiera de la aplicacion de recursos para cancelar la obligacion y es
     posible estimar su monto confiablemente.

     La Compania estima el valor presente de su obligacion futura por
     remediacion y cierre de mina (pasivo por remediacion o "PPR"), e incrementa
     el valor en libros del activo (activo por remediacion o "APR") a retirarse
     en el futuro, el mismo que se muestra en el rubro Otros activos en el
     balance general. Posteriormente, el APR se atribuye a los resultados en el
     plazo de vida util de los activos que le dieron origen y es ajustado para
     reflejar los cambios que pudieran resultar por el paso del tiempo y de
     revisiones de, ya sea, la fecha de ocurrencia o el monto del valor presente
     originalmente estimados.

     k) Creditos tributarios por programas de reinversion -

     El beneficio tributario por programas de reinversion (Nota 11-c) se
     reconoce en el ejercicio en el que se restringen las utilidades, como una
     reduccion del impuesto a la renta a pagar.

     l) Reconocimiento de ingresos por venta -

     Los ingresos por venta de mineral se reconocen en el momento de entrega del
     mineral al transportista designado por el cliente, momento en el que se
     transfieren al cliente los riesgos y beneficios inherentes a la propiedad
     del mineral.


                                       27



     Pagina 6

     m) Contingencias -

     Los pasivos contingentes no se reconocen en los estados financieros y se
     exponen en notas a los estados financieros a menos que su ocurrencia sea
     remota. Los activos contingentes no se reconocen en los estados financieros
     y se revelan solo si es probable su realizacion.

     n) Efectivo y equivalentes de efectivo -

     Para propositos del estado de flujos de efectivo, el efectivo y
     equivalentes de efectivo comprenden el efectivo disponible, depositos a la
     vista en bancos y otras inversiones altamente liquidas de corto plazo.

     o) Nuevos pronunciamientos contables -

     A la fecha el Comite de Normas Internacionales de Contabilidad (IASB por
     sus siglas en ingles) ha completado el proceso de revision de las Normas
     Internacionales de Contabilidad, proceso que se conoce como el "Proyecto de
     Mejora" y ha emitido nuevas normas contables. Todas las revisiones de las
     NIC existentes y las nuevas NIIF emitidas (seis) tienen vigencia a nivel
     internacional a partir del 1 de enero de 2005; con excepcion de la NIIF 6
     cuya vigencia es a partir del 1 de enero del 2006. A la fecha estas normas
     no han sido aprobadas en el Peru por el Consejo Normativo de Contabilidad.
     La Gerencia esta evaluando el impacto que significara la adopcion de las
     NIC revisadas y las nuevas NIIF emitidas en los estados financieros de la
     Compania.

     Como parte del proyecto de mejora de las NIC llevado a cabo, quince NIC
     fueron revisadas con el objetivo de reducir o eliminar procedimientos
     alternativos, redundancias y conflictos entre las normas, para tratar con
     ciertos aspectos de convergencia, sustancialmente con las normas
     norteamericanas, e introducir otras mejoras.

     Las NIC modificadas por el proyecto se detallan a continuacion:

     -    NIC 1 (revisada en el 2003) afecta la presentacion del interes
          minoritario y otras revelaciones.

     -    NIC 2 (revisada en el 2003) elimina el metodo de valuacion de ultimas
          entradas - primeras salidas.

     -    NIC 8, 10, 16, 17, 21, 24, 27, 28, 31, 32, 33, y 40 (revisadas en el
          2003) y la NIC 39 (revisada en el 2004) no contienen cambios
          importantes.

     En adicion como parte de la revision de las normas relativas a
     combinaciones de negocios, que resulto en la emision del NIIF 3, las NIC 36
     y 38 tambien fueron revisadas.


                                       28



     Pagina 7

     Las NIIF emitidas se detallan a continuacion:

     NIIF 2 - Pagos en Base a Acciones; NIIF 3 - Combinacion de Negocios; NIIF 4
     - Contratos de Seguro; NIIF 5 - Activos no Corrientes Mantenidos para la
     Venta y Operaciones Discontinuas y la NIIF 6 - Exploracion y Evaluacion de
     Recursos Minerales

3    INVERSIONES DISPONIBLES PARA LA VENTA

     Al 31 de diciembre del 2004 este rubro comprende inversiones en Bonos del
     Tesoro Norteamericano que devengan un interes anual a una tasa variable.
     Estas inversiones se mantendran por tiempo indefinido y pueden ser vendidas
     cuando lo requiera la Compania. Estas inversiones se clasifican como
     activos corrientes dado que la Gerencia estima venderlas para aumentar el
     capital operativo de la Compania. El valor en libros de estas inversiones
     corresponde a su valor razonable a la fecha de los estados financieros.
     Estos bonos han devengado intereses por US$591,000 que se incluyen en la
     cuenta de gastos financieros, neto en el estado de ganancias y perdidas.

4    EMPRESAS AFILIADAS

     El movimiento de las cuentas por cobrar y por pagar con empresas afiliadas
     por el ano 2004, es el siguiente:



                                          SALDO                               SALDO
                                         INICIAL   ADICIONES   DEDUCCIONES    FINAL
                                          US$000     US$000        US$000    US$000
                                         -------   ---------   -----------   ------
                                                                 
Por cobrar -
Phelps Dodge Sales Company (PDSC)         10,546    161,383     (163,081)     8,848
                                          ======    =======     ========      =====
Por pagar -
Phelps Dodge Corporation                     306      3,796       (3,333)       769
Phelps Dodge Sales Company                    34        137         (138)        33
Sociedad Minera El Abra S.A                   --         16          (12)         4
Compania Contractual Minera Candelaria        17         --          (17)        --
Phelps Dodge Mining Services                  --        626         (626)        --
                                          ------    -------     --------      -----
                                             357      4,575       (4,126)       806
                                          ======    =======     ========      =====


Las cuentas por cobrar estan referidas a ventas de catodos de cobre. Estos
saldos son considerados de vencimiento corriente, no devengan intereses y no
tienen garantias especificas.

En el ano 2004, la Compania vendio catodos de cobre a PDSC por aproximadamente
US$161,383,000 (US$115,347,000 en el 2003) y le pago comisiones por US$137,000
(US$158,000 en el 2003).


                                       29



     Pagina 8

     Las cuentas por pagar se originan por operaciones relacionadas
     principalmente con la prestacion de servicios y reembolsos de gastos. Estos
     saldos son de vencimiento corriente, no devengan intereses y no tienen
     garantias especificas.

5    EXISTENCIAS

     Al 31 de diciembre este rubro comprende:



                                      2004     2003
                                     ------   ------
                                     US$000   US$000
                                        
Catodos de cobre                      2,401    3,076
Producto en proceso                  13,621    9,428
Materiales y suministros             13,712   15,802
Existencias por recibir                 554      664
                                     ------   ------
                                     30,288   28,970
Provision por obsolescencia de
materiales y suministros             (1,374)  (4,153)
                                     ------   ------
                                     28,914   24,817
Productos en proceso a largo plazo   (3,570)  (3,175)
                                     ------   ------
                                     25,344   21,642
                                     ======   ======


     De acuerdo con estimaciones efectuadas por la Gerencia, el monto de la
     provision para obsolescencia de materiales y suministros es suficiente
     sobre la base de la relacion entre su consumo futuro proyectado en el
     proceso productivo y su rotacion.


                                       30



     Pagina 9

6    INMUEBLES, MAQUINARIA Y EQUIPO

     El movimiento de la cuenta inmuebles, maquinaria y equipo y el de su
     correspondiente depreciacion acumulada, por el ano terminado el 31 de
     diciembre del 2004, es el siguiente:



                                        ADICIONES
                                        AL COSTO/     DEDUC-
                              SALDO    APLICADAS A   CIONES Y   TRANSFE-   SALDO
                             INICIAL    RESULTADOS    AJUSTES    RENCIAS    FINAL
                             -------   -----------   --------   --------   -------
                              US$000      US$000      US$000     US$000     US$000
                                                            
Costo -
Terrenos                       1,475          --        (51)         --      1,424
Edificios y otras
   construcciones             37,408          --       (121)       3777     37,664
Maquinaria y equipo          275,000          --        (26)      4,914    279,888
Unidades de transporte         4,244          --        (18)        321      4,547
Muebles y enseres                196          --         --          --        196
Equipos diversos               4,030          --       (100)        477      4,407
Obras en curso                 2,526      16,772         --      (6,089)    13,209
Provision por comparacion
   con el valor de mercado   (23,851)         --         49          --    (23,802)
                             -------     -------       ----      ------   --------
Van:                         301,028)         --         --          --    317.533
                             -------     =======       ====      ======   --------
Vienen:                      301,028          --         --          --    317.533
                             -------     =======       ====      ======   --------
Depreciacion acumulada -
Edificios y otras
   construcciones             10,212       1,741        (56)         --     11,897
Maquinaria y equipo          129,894      18,440        (32)         --    148,302
Unidades de transporte         3,551         286        (18)         --      3,819
Muebles y enseres                105          19         --          --        124
Equipos diversos               3,323         338        (75)         --      3,586
                             -------     -------       ----      ------   --------
                             147,085      20,824       (181)         --    167,728
                             =======     =======       ====      ======    =======
Costo neto                   153,943                                       149,805
                             =======                                       =======



                                       31



     Pagina 10

7    GASTOS DE DESARROLLO DE MINA

     El movimiento de la cuenta gastos de desarrollo de mina y el de su
     correspondiente amortizacion acumulada, por el ano terminado el 31 de
     diciembre del 2004, es el siguiente:



                                           ADICIONES
                                           AL COSTO/
                                 SALDO    APLICADAS A    SALDO
                                INICIAL    RESULTADOS    FINAL
                                -------   -----------   ------
                                 US$000      US$000     US$000
                                               
Costo -

Gastos de desarrollo             11,982         --      11,982
Gastos de preparacion de mina    14,158         --      14,158
                                 ------     ------      ------
                                 26,140         --      26,140
                                 ------     ======      ------
Amortizacion acumulada -
Gastos de desarrollo y
Gastos de preparacion de mina     8,198      1,756       9,954
                                 ------     ------      ------
Costo neto                       17,942      1,756      16,186
                                 ======     ======      ======


     Los gastos de desarrollo corresponden a los costos incurridos en la
     confirmacion de las reservas minables en los tajos Santa Rosa y Cerro
     Verde. Los gastos de preparacion de mina se refieren a los costos de
     desbroce incurridos hasta el 31 de diciembre de 1999 en la preparacion del
     tajo Cerro Verde para continuar su explotacion determinado en funcion de
     las reservas estimadas de mineral.


                                       32




Pagina 11

     La amortizacion de estos gastos se calcula por el metodo de unidades
     producidas.

8    IMPUESTO A LA RENTA Y PARTICIPACION DE LOS TRABAJADORES DIFERIDO

     a)   Al 31 de diciembre el impuesto a la renta y la participacion de los
          trabajadores diferido resulta de las siguientes partidas temporales:



                                                           2004       2003
                                                         --------   -------
                                                          US$000     US$000
                                                              
Deudor:
Provision para obsolescencia de existencias               (1,374)    (4,153)
Diferencia en metodo de valorizacion de existencias       (9,907)   (14,825)
Provision para cierre de mina                             (4,681)    (4,014)
Provision por contratos de cobertura de intereses             --       (913)
                                                         -------    -------
                                                         (15,962)   (23,905)
                                                         -------    -------
Acreedor:
Diferencia en metodo de depreciacion                     110,116     98,898
Gastos de desbroce diferidos                              11,852     13,269
Gastos de desarrollo de mina                               2,086      1,983
                                                         -------    -------
                                                         124,054    114,150
                                                         -------    -------
                                                         108,092     90,245
                                                         =======    =======
Tasa de la participacion de los trabajadores (8%) y
del impuesto a la renta (30%)                               35.6%      35.6%
                                                         =======    =======
Total del impuesto diferido acreedor al final del ano     38,480     32,127
Total del impuesto diferido acreedor al inicio del ano   (32,127)   (19,998)
                                                         -------    -------
Efecto total del ano                                      (6,353)   (12,129)
Efecto en el patrimonio                                       --        325
                                                         -------    -------
Cargo a resultados del ano                                (6,353)   (11,804)
                                                         =======    =======


     b)   El impuesto a la renta y participacion de los trabajadores diferidos
          se discrimina en:



                                     2004     2003
                                    ------   ------
                                    US$000   US$000
                                       
Participacion de los trabajadores    8,647    7,220
Impuesto a la renta                 29,833   24,907
                                    ------   ------
                                    38,480   32,127
                                    ======   ======



                                       33



     Pagina 12

9    PARTICIPACION DE LOS TRABAJADORES

     De acuerdo con la legislacion vigente, la participacion de los trabajadores
     en las utilidades de la Compania es el 8% de la renta anual antes de
     impuestos. Esta participacion es considerada como gasto deducible de la
     Compania para la determinacion del impuesto a la renta.

10   PATRIMONIO NETO

     a) Capital -

     Al 31 de diciembre del 2004 y 2003 el capital autorizado, suscrito y pagado
     de acuerdo con los estatutos de la Compania y sus modificaciones esta
     representado por 227,309,099 acciones comunes. Segun el acuerdo de
     accionistas del 11 de julio del 2003 se acordo denominar el valor nominal
     de las acciones en dolares estadounidenses en US$0.54 por accion. La
     cotizacion bursatil de estas acciones al 31 de diciembre del 2004 fue de
     US$3.96 por accion y su frecuencia de negociacion de 100%.

     Al 31 de diciembre del 2004, la estructura societaria del capital de la
     Compania es la siguiente:



                                              PORCENTAJE
PORCENTAJE DE PARTICIPACION    NUMERO  DE      TOTAL DE
INDIVIDUAL DEL CAPITAL        ACCIONISTAS   PARTICIPACION
- ---------------------------   -----------   -------------
                                      
Hasta 1.00                        943             8.35
De 1.01 al 10.00                    1             9.17
De 80.01 a 90.00                    1            82.48
                                  ---           ------
                                  945           100.00
                                  ===           ======


     b) Capital adicional -

     Al 31 de diciembre del 2004 y 2003 esta cuenta comprende el diferencial
     resultante por la conversion del valor nominal de las acciones
     representativas del capital social a dolares estadounidenses.

     c) Reserva legal -

     De acuerdo con la Ley General de Sociedades, la reserva legal se constituye
     con la transferencia del 10% de la utilidad neta anual hasta alcanzar un
     monto equivalente al 20% del capital pagado. En ausencia de utilidades no
     distribuidas o de reservas de libre disposicion, la reserva legal debera
     ser aplicada a la compensacion de perdidas, debiendo ser repuesta con las
     utilidades de ejercicios posteriores. Esta reserva puede ser capitalizada
     siendo igualmente obligatoria su reposicion.


                                       34



     Pagina 13

     d) Resultados acumulados -

     En virtud de los contratos de estabilidad tributaria suscritos con el
     Estado Peruano (Nota 11- a), la Compania esta autorizada a transferir al
     exterior, en divisas libremente convertibles, el integro de sus capitales y
     dividendos registrados en el organismo nacional competente. Asimismo, los
     dividendos y cualquier otra forma de distribucion de utilidades no
     constituyen renta gravable para efectos del impuesto a la renta.

     Al 31 de diciembre del 2004 esta cuenta incluye US$4.9 millones que seran
     transferidos en el 2005 a una cuenta especial en el patrimonio neto
     denominada utilidades restringidas. Este monto corresponde a la inversion
     sobre la que se calculo el credito contra el impuesto a la renta del ano
     2004 en aplicacion del Programa de Reinversion por el periodo de octubre
     del 2004 a febrero del 2007 (Nota 11- c).

     En adicion, esta cuenta incluye US$8.8 millones correspondiente a la
     utilidad del ano 2004 que sera transferido a la reserva legal en el 2005.

11   SITUACION TRIBUTARIA

     a)   El 16 de marzo de 1994 la Compania suscribio un contrato de garantias
          y medidas de promocion a la inversion, mediante el cual se otorga
          ciertas garantias a la Compania entre las que se encuentra la
          estabilidad en el regimen tributario vigente en la fecha de aprobacion
          del plan de inversion de la Compania. El 4 de noviembre de 1994 la
          Compania cumplio con las condiciones de dicho contrato y recibio la
          aprobacion del Gobierno en diciembre de 1994.

          En adicion, el 13 de febrero de 1998 la Compania suscribio un contrato
          con las mismas caracteristicas del anterior con relacion a una
          inversion de US$224,980,000, recibiendo la aprobacion del Gobierno en
          noviembre de 1998. De acuerdo con los terminos del contrato, el plazo
          de duracion de la estabilidad del regimen tributario se extiende por
          un periodo de 15 anos contados a partir del 1 de enero de 1999.

     b)   La Gerencia considera que ha determinado la materia imponible bajo el
          regimen general del impuesto a la renta de acuerdo con la legislacion
          tributaria vigente en la fecha del contrato antes mencionado, la que
          exige agregar y deducir al resultado antes de impuestos y
          participaciones, las partidas que la referida legislacion reconoce
          como gravables y no gravables, respectivamente.

          Al 31 de diciembre del 2004 y 2003 la tasa del impuesto a la renta es
          de 30%. En adicion al regimen general, la empresa esta sujeta al
          impuesto minimo a la renta equivalente al 2% del total de sus activos
          netos de depreciaciones y amortizaciones. El impuesto cargado a
          resultados del ano 2003 corresponde al mayor entre el impuesto a la
          renta del regimen general y el impuesto minimo a la renta. En el ano
          2003 el impuesto a la renta corresponde al regimen del impuesto
          minimo.


                                       35



     Pagina 14

     Al 31 de diciembre del 2004 la materia imponible ha sido determinada como
     sigue:



                                                           US$000
                                                          -------
                                                       
Utilidad antes de participaciones e impuesto a la renta   139,353
                                                          -------
Mas:
Amortizacion de otros activos                               1,417
Provision para cierre de mina                                 379
Gastos no deducibles                                        5,987
Otras adiciones                                               185
                                                          -------
                                                            7,968
                                                          -------
Menos:
Depreciacion a la tasa del 20%                            (11,203)
Ajuste de inventarios en proceso y productos terminados    (5,230)
Provision para desvalorizacion de existencias              (2,779)
Otras deducciones                                          (2,172)
                                                          -------
                                                          (21,384)
                                                          -------
Sub-total                                                 125,937)
Participacion de los trabajadores                         (10,074)
                                                          -------
                                                          115,863)
Reinversion de utilidades (Nota 10-d)                      (4,917)
                                                          -------
                                                          110,946
                                                          -------
Impuesto a la renta                                        33,283
Impuesto de anos anteriores y otros ajustes                 1,979
                                                          -------
Total acreditado en resultados                             35,262
                                                          =======


     Al 31 de diciembre del 2004 el impuesto a la renta sobre la utilidad antes
     de impuestos difiere del monto teorico que hubiera resultado de aplicar la
     tasa del impuesto a los ingresos de la Compania, como sigue:



                                                      US$000
                                                     -------
                                                  
Utilidad antes de impuestos                          139,353
                                                     -------
Impuesto calculado aplicando la tasa de 30%           41,806
Gastos no deducibles                                   1,796
Gastos deducibles                                       (332)
Reinversion de utilidades                             (1,475)
Participacion de los trabajadores                     (3,586)
                                                     -------
Impuesto a la renta del ano (corriente y diferido)    38,209
                                                     =======



                                       36



     Pagina 15

     Al 31 de diciembre del 2003 no se ha efectuado esta conciliacion debido a
     que en dicho ano el impuesto minimo resulto mayor que el impuesto a la
     renta del regimen general.

c)   De acuerdo con el Decreto Supremo No 07-94-EF, la Compania puede obtener un
     beneficio tributario (credito por reinversion) aplicando las utilidades no
     distribuidas a programas de inversion orientados a lograr un incremento de
     los niveles de produccion (Programa de Reinversion). Los creditos por
     reinversion equivalen al 80% del monto invertido y son obtenidos mediante
     solicitud y aprobados por el Ministerio de Energia y Minas.

     Con fechas 3 de setiembre y 25 octubre del 2004 la Compania remitio para la
     aprobacion del Ministerio de Energia y Minas el Programa de Reinversion por
     el periodo de octubre del 2004 a febrero del 2007 por US$800,030,000
     relacionado con las obras e infraestructura para la construccion de una
     planta concentradora para procesar adicionalmente 108,000 TM/dia de mineral
     de sulfuros primarios para producir concentrado de cobre, lo que se
     incrementara la capacidad de 39,000 TM/dia a 147,000 TM/dia de mineral de
     cobre.

     El 9 diciembre del 2004, a traves de la Resolucion Ministerial
     No.510-2004-MEM/DM, el Ministerio de Energia y Minas aprobo el Programa de
     Reinversion solicitado por la Compania con cargo a utilidades no
     distribuidas por el periodo antes indicado.

     En aplicacion de este programa, durante el ano 2004 la Compania reconocio
     un beneficio de US$4.9 millones correspondientes a las utilidades de dicho
     ano con cargo a la materia imponible que genero un menor impuesto de US$1.5
     millones.

d)   La Administracion Tributaria tiene la facultad de revisar y, de ser el
     caso, corregir el impuesto a la renta determinado por la Compania en los
     cuatro ultimos anos, contados a partir de la presentacion de la declaracion
     jurada del impuesto correspondiente (anos abiertos a fiscalizacion).

     En el caso del impuesto a la renta, los anos 1999 al 2003 inclusive, estan
     sujetos a fiscalizacion. En el caso del Impuesto General a las Ventas el
     periodo sujeto a fiscalizacion corresponde al comprendido entre diciembre
     de 1999 y diciembre del 2003. Debido a que pueden producirse diferencias en
     la interpretacion por parte de la Administracion Tributaria sobre las
     normas aplicables a la Compania, no es posible anticipar a la fecha si se
     produciran pasivos tributarios adicionales como resultado de eventuales
     revisiones. Cualquier impuesto adicional, moras, recargos e intereses, si
     se produjeran, seran reconocidos en los resultados del ano en el que la
     diferencia de criterios con la Administracion Tributaria se resuelva. La
     Gerencia y sus asesores legales estiman que no surgiran pasivos de
     importancia como resultado de estas posibles revisiones.


                                       37



     Pagina 16

12   COSTO DE VENTAS

     El costo de ventas por los anos terminados el 31 de diciembre comprende:



                                               2004      2003
                                             -------   -------
                                              US$000    US$000
                                                 
Inventario inicial de productos terminados     3,076     2,372
Consumo de materias primas e insumos          46,684    39,101
Mano de obra directa                          14,979    13,362
Depreciacion y amortizacion                   22,765    20,396
Otros costos                                  38,572    31,807
Variacion de productos en proceso             (4,193)       --
Inventario final de productos terminados      (2,401)   (3,076)
                                             -------   -------
                                             119,482   103,962
                                             =======   =======


13   GASTOS FINANCIEROS, NETO

     Los gastos financieros, neto por los anos terminados el 31 de diciembre
     comprenden:



                                           2004     2003
                                          ------   ------
                                          US$000   US$000
                                             
Intereses por prestamos bancarios             --     (942)
Intereses por contratos de cobertura de
tasas de interes                              --     (845)
Intereses por depositos bancarios          1,148      142
Otros gastos financieros                  (1,975)    (506)
                                           -----    -----
                                            (827)  (2,151)
                                           =====    =====


14   UTILIDAD POR ACCION

     La utilidad por accion basica por cada accion comun ha sido determinada de
     la siguiente manera:



                                                     2004             2003
                                                --------------   --------------
                                                           
Utilidad atribuible                             US$ 87,663,000   US$ 43,275,000
                                                ==============   ==============
Promedio ponderado de acciones en circulacion      227,309,099      227,309,099
                                                ==============   ==============
Utilidad basica por accion                      US$      0.386   US$      0.190
                                                ==============   ==============


     La utilidad basica por accion es calculada dividiendo la utilidad neta
     entre el promedio ponderado de las acciones comunes en circulacion a la
     fecha de los estados financieros.


                                       38



     Pagina 17

15   ADMINISTRACION DE RIESGOS FINANCIEROS

     Factores de riesgo financiero

     Las actividades de la Compania la exponen a ciertos riesgos financieros,
     que incluyen los efectos de las variaciones en los precios de mercado de
     los minerales, variaciones en los tipos de cambio y en las tasas de
     interes. Al 31 de diciembre del 2004 la Compania no mantiene este tipo de
     contratos de cobertura a estos riesgos. Por otro lado, como parte de Phelps
     Dodge Mining Company, ciertos riesgos financieros como variacion de precios
     y riesgo de cambio son cubiertos a nivel del grupo tomado en su conjunto.

     i)   Riesgo de tipo de cambio

     La Compania opera principalmente en dolares estadounidenses y registra sus
     operaciones en dicha moneda. Sus ventas, compras y gastos operativos son
     sustancialmente efectuados en dicha moneda, reduciendo asi el riesgo de
     verse afectada por las variaciones en los tipos de cambio en relacion con
     el nuevo sol peruano.

     ii)  Concentracion de ventas y riesgo crediticio

     La Compania realiza ventas a una afiliada del exterior y companias locales
     no relacionadas. Las ventas por concentracion geografica son las
     siguientes:



                   2004      2003
                 -------   -------
                  US$000    US$000
                     
Norteamerica     161,383   115,347
Ventas locales    99,399    41,377
                 -------   -------
                 260,782   156,724
                 =======   =======


     La Compania ha establecido politicas para asegurar que la venta de bienes y
     servicios se efectuan a clientes con adecuada historia de credito.

     iii) Riesgo de liquidez

     La administracion prudente del riesgo de liquidez implica mantener
     suficiente efectivo y equivalentes de efectivo, la disponibilidad de
     financiamiento a traves de una adecuada cantidad de fuentes de credito
     comprometidas y la capacidad de cerrar posiciones en el mercado.


                                       39



     Pagina 18

16   INFORMACION SOBRE FLUJOS DE EFECTIVO

     El estado de flujos de efectivo proporciona informacion sobre los cambios
     en el efectivo. Los flujos de efectivo de las actividades de operacion
     incluyen pagos/cobros de intereses y pago del impuesto a la renta como
     sigue:



                       2004     2003
                      ------   ------
                      US$000   US$000
                         
Intereses pagados      1,975    1,833
Intereses recibidos    1,148      142
Impuesto a la renta    3,278    1,393


17   RESERVAS DE MINERAL (NO AUDITADO)

     Al 31 de diciembre, las reservas probadas de mineral de la Compania,
     medidas en miles de toneladas metricas secas son:



                                                      LEYES
                                                   -----------
MINERAL                         2004       2003    2004   2003
- -------                      ---------   -------   ----   ----
                                              
Minerales para lixiviacion     351,214   236,552   0.45   0.54
Minerales para molienda      1,295,528   420,959   0.49   0.61


     Asimismo, la produccion en toneladas metricas netas ha sido la siguiente:



PRODUCCION    2004     2003
- ----------   ------   ------
                
Catodos      88,502   87,336


     Precio promedio por tonelada metrica seca:



           2004    2003
          -----   -----
           US$     US$
            
Catodos   2,868   1,807



                                       40



                                                                   SCHEDULE 6.12

                      ABSENCE OF CERTAIN CHANGES AND EVENTS

- -    Advance Payment to Consorcio Colca towards construction work to be
     performed with respect to the Pillones Dam in an aggregate approved amount
     of US$1.3 million.


                                       41



                                                                   SCHEDULE 6.13

      TITLE TO ASSETS, MINING AND BENEFICIATION CONCESSION AND OTHER RIGHTS

- -    Permit for the third phase of the expansion of the Beneficiation Concession
     that has not yet been obtained and can only be granted by the Ministry of
     Energy and Mines after completion of the construction and inspection
     process.

- -    Easements related to the 220 KV Transmission Line are in the process of
     being acquired. In addition, such easements have not yet been recognized by
     the Electrical General Direction of the Ministry of Energy and Mines.


                                       42



                                                                   SCHEDULE 6.14

                   RELATED PARTY TRANSACTIONS AND COMMITMENTS

1.   Supply Agreement by and between Phelps Dodge Sales Company and the
     Borrower, effective as of January 1, 2005.

2.   Operator's Agreement between Minera Phelps Dodge del Peru S.A.C. and the
     Borrower, dated as of June 1, 2005.

3.   Cathodes Sales Agreement between Phelps Dodge Sales Company and the
     Borrower, dated as of September 30, 2005.

4.   Concentrate Sales Agreement between Phelps Dodge Sales Company and the
     Borrower, dated as of September 30, 2005.

5.   Concentrate Sales Agreement between Sumitomo Metal Mining, Co., Ltd. and
     the Borrower, dated as of June 1, 2005, as amended by Amendment No.1
     thereto dated as of September 30, 2005.

6.   Parent Company Guarantee between Phelps Dodge Corporation and the Borrower
     regarding the Offtake Agreements, dated as of September 30, 2005.

7.   Parent Company Guarantee between Phelps Dodge Corporation and the Borrower
     regarding the Operator's Agreement, dated as of September 30, 2005.

     Each of the above agreements will continue following the Closing.


                                       43



                                  Schedule 6.24

                                  Tax Liability

     The Borrower has been advised that under the current law of Peru:

1. Interest payments to a non-Peruvian governmental agency, in respect of a loan
granted by such agency with the purpose of encouraging, developing and promoting
certain activities in Peru, will be exempt from withholding tax until December
31, 2006 (the "Promotional Credit Regime"). If the Promotional Credit Regime is
not renewed, interest payments to non-Peruvian governmental agencies will be
subject to a 4.99% withholding tax rate, provided that the requirements
described in paragraph 2 below are met.

2. Payments to a Person that is not domiciled in Peru, other than interest
payments to a non-Peruvian governmental agency that qualifies for the
Promotional Credit Regime, in respect of a loan granted by such Person to a
borrower domiciled in Peru, will be subject to a 4.99% withholding tax rate,
provided that all of the following requirements are met:

(i) Amounts disbursed under the loan are transferred to the borrower through the
Peruvian financial system;

(ii) Payments made by the borrower in respect of the loan do not exceed PRIME
plus 6 percentage points (in the case of loans granted from the United States)
or LIBOR plus 7 percentage points (in the case of loans granted from other
countries);

(iii) Amounts disbursed under the loan are used in a business carried out in
Peru;

(iv) The lender and the borrower are not "related" parties, as such term is
defined in the tax laws of Peru; and

(v) The participation of the lender in the financing is not made with the sole
purpose of avoiding a direct debtor-creditor relationship between "related"
parties.

3. If the requirements set forth above are not met, amounts paid to a Person not
domiciled in Peru, in respect of a loan made by such Person, will be subject to
a 30% withholding tax rate in Peru.



                                    Exhibit A

                               JBIC Loan Agreement



================================================================================

                                                                  EXECUTION COPY

                                U.S.$247,500,000

                               JBIC LOAN AGREEMENT

                                  by and among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,

                    JAPAN BANK FOR INTERNATIONAL COOPERATION,

                                       and

                      SUMITOMO MITSUI BANKING CORPORATION,

                                  as JBIC Agent

                        Dated as of September 30th, 2005

                       Cerro Verde Primary Sulfide Project

================================================================================



                                TABLE OF CONTENTS



                                                                                     PAGE
                                                                                     ----
                                                                                  
ARTICLE I DEFINITIONS AND INTERPRETATION..........................................     2
   Section 1.01.    Definitions...................................................     2
   Section 1.02.    Rules of Interpretation.......................................     5

ARTICLE II AMOUNT OF FACILITY AND USE OF JBIC LOAN................................     6
   Section 2.01.    Commitment....................................................     6
   Section 2.02.    Eligible Currency.............................................     6

ARTICLE III DISBURSEMENT..........................................................     6
   Section 3.01.    Disbursement Procedures.......................................     6
   Section 3.02.    Records.......................................................     6
   Section 3.03.    Final Disbursement............................................     6

ARTICLE IV REPAYMENT AND PREPAYMENT OF THE JBIC LOAN..............................     7
   Section 4.01.    Repayment of JBIC Loan........................................     7
   Section 4.02.    Amortization Schedule.........................................     7
   Section 4.03.    Voluntary Prepayment..........................................     7
   Section 4.04.    Mandatory Prepayment..........................................     8
   Section 4.05.    Amounts Prepaid...............................................     8
   Section 4.06.    Suspension and Termination of JBIC Commitment.................     8

ARTICLE V INTEREST, COMMITMENT CHARGE AND OVERDUE PAYMENT.........................     8
   Section 5.01.    Interest......................................................     8
   Section 5.02.    Overdue Payment...............................................     8
   Section 5.03.    Commitment Charge.............................................     9
   Section 5.04.    Basis of Calculation..........................................    10
   Section 5.05.    Up-front Fee..................................................    10
   Section 5.06.    Agency Fee....................................................    11
   Section 5.07.    Promissory Notes..............................................    11

ARTICLE VI PAYMENTS AND CURRENCY..................................................    11
   Section 6.01.    Place and Time of Payment.....................................    11
   Section 6.02.    Payments to be Free of Claims and Taxes.......................    12
   Section 6.03.    Payments in Eligible Currency.................................    12
   Section 6.04.    Payment to be made on Business Day............................    12
   Section 6.05.    Borrower Acknowledgment.......................................    12

ARTICLE VII REPRESENTATIONS AND WARRANTIES........................................    12
   Section 7.01.    Representations and Warranties................................    12
   Section 7.02.    JBIC Environmental Guidelines.................................    12



                                       -i-



                                TABLE OF CONTENTS
                                   (continued)



                                                                                     PAGE
                                                                                     ----
                                                                                  
ARTICLE VIII COVENANTS............................................................    13
   Section 8.01.    Master Participation Agreement Covenants......................    13

ARTICLE IX ENVIRONMENTAL AND SOCIAL CONSIDERATIONS................................    13
   Section 9.01.    Environmental and Social Considerations.......................    13
   Section 9.02.    Effect of Breach of Environmental and Social Considerations...    14

ARTICLE X EVENTS OF DEFAULT; REMEDIES.............................................    14
   Section 10.01.   Events of Default.............................................    14
   Section 10.02.   Consequences of JBIC Event of Default.........................    15

ARTICLE XI CONDITIONS PRECEDENT...................................................    15
   Section 11.01.   Conditions Precedent to Initial Disbursement..................    15
   Section 11.02.   Conditions to Subsequent JBIC Disbursements...................    15

ARTICLE XII TAXES, FEES AND EXPENSES..............................................    16
   Section 12.01.   Indemnification for Taxes, Fees and Expenses..................    16
   Section 12.02.   Relevant Currency.............................................    17

ARTICLE XIII GOVERNING LAW AND JURISDICTION.......................................    17
   Section 13.01.   GOVERNING LAW.................................................    17
   Section 13.02.   Good Faith Consultation.......................................    17
   Section 13.03.   Submission to Jurisdiction....................................    17
   Section 13.04.   WAIVER OF TRIAL...............................................    17

ARTICLE XIV JBIC AGENT............................................................    17
   Section 14.01.   Appointment of JBIC Agent.....................................    17
   Section 14.02.   Tax Certification.............................................    18

ARTICLE XV MISCELLANEOUS..........................................................    18
   Section 15.01.   Confidentiality...............................................    18
   Section 15.02.   No Assignment; Funding........................................    19
   Section 15.03.   No Waiver, Remedies Cumulative................................    19
   Section 15.04.   Partial Illegality............................................    19
   Section 15.05.   Communications................................................    19
   Section 15.06.   Use of English Language.......................................    20
   Section 15.07.   Successors and Assigns........................................    20
   Section 15.08.   Further Assurances............................................    21
   Section 15.09.   Counterparts..................................................    21
   Section 15.10.   Abbreviation..................................................    21



                                      -ii-



                                     ANNEXES

Annex A   Disbursement Procedures
          Schedule 1   Request for Disbursement
          Schedule 2   Statement of Expenditures
          Schedule 3   Table of Proposed Disbursements
          Schedule 4   JBIC Disbursement Schedule

Annex B   Amortization Schedule

Annex C   Repayment and Disbursement Accounts

Annex D   Environmental Monitoring Form

Annex E   JBIC Environmental Guidelines

Annex F   Tax Certification

Annex G   Disbursement and Payment Procedures

Annex H   Form of Promissory Note

Annex I   Environmental Disclosure


                                      -iii-



                               JBIC LOAN AGREEMENT

     This JBIC LOAN AGREEMENT made as of September 30th, 2005 (this "AGREEMENT")
by and among SOCIEDAD MINERA CERRO VERDE S.A.A., a Peruvian sociedad anonima
abierta listed on the Lima Stock Exchange and organized under the laws of Peru
(the "BORROWER"), JAPAN BANK FOR INTERNATIONAL COOPERATION ("JBIC"), and
SUMITOMO MITSUI BANKING CORPORATION, in its capacity as JBIC Agent (the "JBIC
AGENT").

                                   WITNESSETH:

     (A) WHEREAS, (i) the Borrower owns the Cerro Verde copper mine, including a
copper leaching and solution extraction/electrowinning (SX/EW) operation,
located in the district of Uchumayo and Yarabamba, Province of Arequipa, Peru
and (ii) the board of directors of the Borrower has approved the development
(the "SULFIDE PROJECT") of the sulfide portion of the ore body beneath the oxide
portion of the ore body currently in production, as more fully set forth in
Schedule D to the Master Participation Agreement (as defined below);

     (B) WHEREAS, the Borrower, JBIC, each of the Senior Facility Lenders party
thereto, and the Appointed Parties party thereto have entered into the Master
Participation Agreement dated as of the date hereof (the "MASTER PARTICIPATION
AGREEMENT") and the Master Security Agreement dated as of the date hereof,
containing, inter alia, certain representations, warranties, and affirmative and
negative covenants of the Borrower to the Senior Facility Lenders, certain
uniform conditions of disbursement for the Senior Facility Loans, certain other
undertakings, common events of default and security provisions for the common
benefit of the Senior Facility Lenders;

     (C) WHEREAS, JBIC is a governmental financial institution of Japan which
has among its objectives providing overseas investment loans to companies in
developing countries in which Japanese companies invest, and has agreed, in
accordance with the Japan Bank for International Cooperation Law and
institutional objectives, to provide a credit facility to the Borrower, which is
invested in by Japanese companies and exports a certain portion of its mining
products to Japan, for purposes of developing and promoting mining activities in
Peru to be carried out by the Borrower;

     (D) WHEREAS, the Borrower has requested JBIC to make funds available to the
Borrower for the financing of the Sulfide Project described above in paragraph
(A)(ii); and

     (E) WHEREAS, JBIC intends that the funding of the Tranche B Loan (as
defined below) shall be provided only upon disbursement of the Tranche B Loan
Funds by certain financial institutions designated as the JBIC Tranche B Funding
Source Banks hereunder.

     NOW THEREFORE, in consideration of the foregoing and of the agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


                                       -1-



                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

          Section 1.01. Definitions. For all purposes of this Agreement, except
as otherwise defined herein, capitalized terms used herein shall have the
respective meanings ascribed to them in the Master Participation Agreement or
the Master Security Agreement, as the case may be. In addition, the following
terms shall have the following meanings:

     "ALLEGED BREACH NOTICE": as defined in Section 9.02;

     "AMORTIZATION SCHEDULE": the schedule of the dates and amounts of
repayments of the Tranche A Loan and Tranche B Loan set forth in Annex B, as the
same may be amended from time to time in accordance with the provisions of this
Agreement;

     "AVAILABILITY PERIOD": commencing on the date on which all the conditions
set forth in Section 11.01 have been satisfied and ending on the Availability
Period End Date;

     "CALCULATION DATE": (i) with respect to any Interest Period, the day which
is two (2) LIBOR Business Days prior to the commencement of such Interest
Period; and (ii) with respect to any Overdue Period, the day which is two (2)
LIBOR Business Days prior to (a) the day on which the Overdue Amount becomes due
and payable (for the period from and including such due date up to and excluding
the immediately succeeding Interest Payment Date (in the case where such period
includes the date of actual receipt of the payment by JBIC, up to and excluding
such date)), and (b) to the extent such overdue amount is not paid during the
period described in Clause (a) above each succeeding Interest Payment Date (for
the subsequent period from and including such Interest Payment Date up to and
excluding the immediately succeeding Interest Payment Date (in the case where
such period includes the date of actual receipt of the payment by JBIC, up to
and excluding such date));

     "DEFAULT": any condition or event which constitutes an MPA Event of Default
or a JBIC Event of Default or which with the giving of notice or lapse of time
or both would, unless cured or waived, become an MPA Event of Default or a JBIC
Event of Default;

     "DISBURSEMENT DATE": each date a JBIC Disbursement is made in accordance
with the provisions of this Agreement;

     "DISBURSEMENT PROCEDURES": the disbursement procedures set forth in Annex A
hereto;

     "DISBURSEMENT SCHEDULE": the disbursement schedule set forth in Schedule 4
to Annex A;

     "ELIGIBLE CURRENCY": as defined in Section 2.02;

     "ENVIRONMENTAL AND SOCIAL CONSIDERATIONS": the considerations described in
Section 9.01(b);


                                       -2-



     "FLOATING RATE": with respect to any Interest Period or any Overdue Period,
(i) the rate per annum (on the basis of a 360-day year) quoted on the Telerate
Screen Page 3750 for the purpose of displaying London interbank offered rates of
major banks for deposits in Dollars as the "British Bankers Association Interest
Settlement Rate" in Dollars (hereinafter referred to as "BBA LIBOR"), or if such
page ceases to display, such other page on Telerate or on such other service as
may be selected by JBIC as suitable for determining BBA LIBOR, for a period of
six (6) months, at approximately 11:00 a.m., London time, on the relevant
Calculation Date, or (ii) if no rate is quoted on such pages on such Calculation
Date, the average (rounded upwards, if necessary, to the nearest one-sixteenth
of one per cent (1/16%)) of the rates per annum for a period of six (6) months
at which deposits in Dollars are offered to at least two Reference Banks, as set
out below, in the London interbank market, in each case, at approximately 11:00
a.m., London time, on such Calculation Date. "REFERENCE BANKS" shall mean two or
more banks selected by JBIC. In the event that such rate is not available at
such time for any reason, then "Floating Rate" for such Interest Period or
Overdue Period shall be determined by JBIC;

     "GUARANTEE PAYMENT": as defined in Section 5.02(b);

     "INDEMNITEE": as defined in Section 12.01(b);

     "JBIC": as defined in the Recitals hereto;

     "JBIC AGENT": Sumitomo Mitsui Banking Corporation in its capacity as JBIC
Agent;

     "JBIC DISBURSEMENT": each disbursement of the JBIC Facility made in
accordance with the provisions of this Agreement, or, as the context may
require, the principal amount of such disbursement from time to time
outstanding;

     "JBIC ENVIRONMENTAL GUIDELINES": means the Japan Bank for International
Cooperation Guidelines for Confirmation of Environmental and Social
Considerations, dated April, 2002, a copy of which is attached hereto as Annex
E;

     "JBIC EVENT OF DEFAULT": as defined in Section 10.01(c);

     "JBIC FACILITY": as defined in Section 2.01;

     "JBIC LOAN": the aggregate principal amount of all JBIC Disbursements
hereunder by JBIC to the Borrower from time to time outstanding;

     "JBIC AGENT NEW YORK DISBURSEMENT ACCOUNT": the JBIC Agent New York
disbursement account specified in Annex C (or such other account as may be
designated from time to time by the JBIC Agent);

     "JBIC AGENT TOKYO DISBURSEMENT ACCOUNT": the JBIC Agent Tokyo disbursement
account specified in Annex C (or such other account as may be designated from
time to time by the JBIC Agent);


                                       -3-



     "JBIC AGENT NEW YORK REPAYMENT ACCOUNT": the JBIC Agent New York repayment
account specified in Annex C (or such other account as may be designated from
time to time by the JBIC Agent);

     "JBIC NEW YORK REPAYMENT ACCOUNT": the JBIC repayment account specified in
Annex C (or such other account as may be designated from time to time by JBIC
Agent);

     "JBIC TRANCHE B FUNDING SOURCE BANK": each of the financial institutions
providing the funds for the Tranche B Loan;

     "LIBOR BUSINESS DAY": a day on which dealings in deposits in Dollars are
carried on in the London interbank Euro-currency market;

     "MASTER PARTICIPATION AGREEMENT": as defined in the Recitals hereto;

     "MATERIAL PROJECT PARTY": a party to any of the Closing Documents;

     "MONTH": a period commencing on a specific day in any calendar month and
ending on and including the day immediately preceding the numerically
corresponding day in the next succeeding calendar month, provided that if there
is no such numerically corresponding day in the next succeeding calendar month,
such period shall expire on and including the last day of such next succeeding
calendar month, and references to "Months" shall be construed accordingly;

     "OVERDUE AMOUNT": the Tranche A Overdue Amount and Tranche B Overdue
Amount;

     "OVERDUE INTEREST": the Tranche A Overdue Interest and Tranche B Overdue
Interest;

     "OVERDUE PERIOD": the Tranche A Overdue Period and Tranche B Overdue
Period;

     "PAYMENT AMOUNT": as defined in Annex G;

     "PAYMENT PROCEDURES": the payment procedures set forth in Annex G;

     "PERSON": means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or any other juridical entity, or a sovereign
state or any agency, authority or political subdivision thereof, or any
international organization, agency or authority;

     "PREPAYMENT NOTICE": as defined in Section 4.03;

     "RELEVANT CURRENCY": as defined in Section 12.02;

     "REQUEST FOR DISBURSEMENT": a request given by the Borrower to the JBIC
Agent in the form specified in Schedule 1 to Annex A;

     "REQUESTED DISBURSEMENT DATE": the Business Day specified in a Request for
Disbursement on which the Borrower has requested JBIC to make a JBIC
Disbursement pursuant to this Agreement and the Master Participation Agreement;


                                       -4-



     "STATEMENT OF EXPENDITURES": a statement furnished by the Borrower which
shall be in the form specified in Schedule 2 to Annex A;

     "TRANCHE A": as defined in Section 2.01;

     "TRANCHE A LOAN": as defined in Section 2.01;

     "TRANCHE A OVERDUE AMOUNT": as defined in Section 5.02(a);

     "TRANCHE A OVERDUE INTEREST": as defined in Section 5.02(a);

     "TRANCHE A OVERDUE PERIOD": as defined in Section 5.02(a);

     "TRANCHE B": as defined in Section 2.01;

     "TRANCHE B LOAN": as defined in Section 2.01;

     "TRANCHE B LOAN FUNDS": the funds provided by the JBIC Tranche B Funding
Source Banks for the Tranche B Loans;

     "TRANCHE B OVERDUE AMOUNT": as defined in Section 5.02(b);

     "TRANCHE B OVERDUE INTEREST": as defined in Section 5.02(b); and

     "TRANCHE B OVERDUE PERIOD": as defined in Section 5.02(b).

          Section 1.02. Rules of Interpretation.

          (a) Except as otherwise expressly provided herein, the rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
shall apply to this Agreement.

          (b) This Agreement and the Master Participation Agreement shall be
viewed as, and shall constitute, one agreement governing the terms and
conditions of the Loans. Except in connection with a breach of Section 7.02 and
Article IX, remedies shall be exercised solely pursuant to and in accordance
with the Master Participation Agreement and the Master Security Agreement,
provided that in connection with the occurrence of a JBIC Event of Default, (i)
JBIC and the JBIC Agent may exercise the remedies set forth in Section 10.02 and
(ii) all other Borrower Enforcement Actions shall be exercised solely in
accordance with the Master Security Agreement.

          (c) In the event of conflict between this Agreement and the Master
Participation Agreement or the Master Security Agreement, except for Section
3.02, Section 4.06(b), Section 7.02, Article IX, Article X, Section 15.01,
Section 15.02 and Annex A, the Master Participation Agreement or the Master
Security Agreement, as the case may be, shall prevail.


                                       -5-



                                   ARTICLE II

                     AMOUNT OF FACILITY AND USE OF JBIC LOAN

          Section 2.01. Commitment. JBIC hereby agrees to make available to the
Borrower, on and subject to the terms and conditions of this Agreement, a loan
facility in Dollars in an aggregate amount not exceeding two hundred forty-seven
million five hundred thousand Dollars (U.S.$247.5 million) (the "JBIC
FACILITY"), consisting of (a) a loan facility in Dollars in an aggregate
principal amount not exceeding one hundred seventy-three million two hundred
fifty thousand Dollars (U.S.$173.25 million) (such loan facility is herein
referred to as "TRANCHE A" and the aggregate principal amount of loans made
under Tranche A from time to time outstanding hereunder is referred to as the
"TRANCHE A LOAN") and (b) a loan facility in Dollars in an aggregate principal
amount not exceeding seventy-four million two hundred fifty thousand Dollars
(U.S.$74.25 million) (such loan facility is herein referred to as "TRANCHE B"
and the aggregate principal amount of loans made under Tranche B from time to
time outstanding hereunder is referred to as the "TRANCHE B LOAN").

          Section 2.02. Eligible Currency. The currency in which JBIC shall make
JBIC Disbursements and, except as provided in Section 12.02, the Borrower shall
make all payments hereunder is Dollars (the "ELIGIBLE CURRENCY").

                                   ARTICLE III

                                  DISBURSEMENT

          Section 3.01. Disbursement Procedures. Subject to the fulfillment of
the conditions referred to in Article XI and the other terms and conditions of
this Agreement, JBIC shall disburse the JBIC Facility only in accordance with
the Disbursement Procedures. Each such JBIC Disbursement shall consist of a
disbursement of the Tranche A Loan and the Tranche B Loan made at the same time
and in proportion to the aggregate principal amount of Tranche A and the
aggregate principal amount of Tranche B, provided that if the condition set
forth in Section 11.01(c) with respect to the initial Disbursement and Section
11.02(c) with respect to all subsequent JBIC Disbursements is not met in respect
of Tranche B, JBIC shall disburse only such portion of Tranche B with respect to
which the JBIC Agent shall have received the corresponding portion thereof from
the relevant JBIC Tranche B Funding Source Banks.

          Section 3.02. Records. The Borrower shall retain or cause to be
retained until two (2) years after the Availability Period End Date all records
(contracts, orders, notices, invoices, bills, receipts and other documents)
evidencing the expenditures for which JBIC Disbursements are requested in
accordance with Annex A hereto and shall enable representatives or agents of
JBIC to examine such records.

          Section 3.03. Final Disbursement. No JBIC Disbursement shall be made
by JBIC under this Agreement or the Master Participation Agreement after the
Availability Period End Date, unless otherwise agreed in writing by JBIC and in
accordance with Section 10.01 of the Master Participation Agreement.


                                       -6-



                                   ARTICLE IV

                    REPAYMENT AND PREPAYMENT OF THE JBIC LOAN

          Section 4.01. Repayment of JBIC Loan. On each Payment Date, the
Borrower shall repay a portion of the aggregate principal amount of the JBIC
Loan outstanding on the Availability Period End Date in an amount equal to the
product of such aggregate principal amount of the JBIC Loan multiplied by the
percentage set forth on the Amortization Schedule with respect to such Payment
Date. The final principal installment shall be repaid on the Sixteenth (16th)
Payment Date and in any event shall be in an amount equal to the aggregate
principal amount of the JBIC Loan outstanding on such date. The final Payment
Date shall occur not later than ninety (90) months after the first Payment Date,
it being understood that in no event shall the Borrower be required to repay an
amount exceeding the principal amount of the JBIC Loan outstanding on such
Payment Date.

          Section 4.02. Amortization Schedule.

          (a) If any prepayment of the JBIC Loan occurs, the amount prepaid
shall be deducted ratably from each of the installments shown in the
Amortization Schedule.

          (b) Promptly after the Availability Period End Date, or, if any
adjustment pursuant to paragraph (a) of this Section 4.02 shall be made,
promptly after such adjustment, the JBIC Agent (in consultation with JBIC) shall
prepare and deliver to the Borrower a notice together with the adjusted
Amortization Schedule setting forth the amount of each installment to be repaid
by the Borrower on each Repayment Date. Such adjusted Amortization Schedule
shall be conclusive in the absence of manifest error.

          Section 4.03. Voluntary Prepayment.

          (a) Except as expressly provided otherwise in the Master Participation
Agreement, the Borrower may not voluntarily prepay all or any part of the JBIC
Loan.

          (b) Subject to satisfaction of the terms of Sections 3.04 and 3.05 of
the Master Participation Agreement, the Borrower may, on any Payment Date
falling after the Completion Release Date and upon giving no less than sixty
(60) days' prior written irrevocable notice to the JBIC Agent and to JBIC (which
notice shall state the amount to be prepaid and the Payment Date on which such
voluntary prepayment shall be made; such notice, a "PREPAYMENT NOTICE"), prepay
in advance of maturity all or any part (but if in part the amount of any
prepayment shall be at least five million five hundred thousand Dollars
(U.S.$5,500,000)) of the JBIC Loan, together with all interest accrued thereon
up to and including the day immediately preceding the date of such prepayment.
Once given, a Prepayment Notice may not be withdrawn.

          (c) In the event of a voluntary prepayment, the Borrower shall pay a
prepayment premium of one-half of one per cent (0.5%) of the amount of principal
amount of Tranche A to be prepaid to JBIC, which premium shall be paid
simultaneously with such prepayment (the "PREPAYMENT PREMIUM"). Once the date
for any voluntary prepayment has been notified pursuant to clause (b) above,
such date shall be deemed as the due date for the amounts to be paid on that
date (including the Prepayment Premium), and should the Borrower


                                       -7-



fail to pay any such amount on such date, the Borrower shall pay interest on
such overdue principal and/or interest and/or Prepayment Premium. Any request
for prepayment made by the Borrower in accordance with this Agreement shall be
irrevocable and the Borrower shall be bound to prepay the JBIC Loan in
accordance therewith.

          (d) Partial prepayments shall be applied to the JBIC Loan in
accordance with Section 3.08 of the Master Participation Agreement.

          Section 4.04. Mandatory Prepayment. The Borrower shall prepay the JBIC
Loan in accordance with the terms of Section 3.06 of the Master Participation
Agreement.

          Section 4.05. Amounts Prepaid. Amounts prepaid pursuant hereto shall
not be reborrowed.

          Section 4.06. Suspension and Termination of JBIC Commitment.

          (a) JBIC or the JBIC Agent may, by notice to the Borrower, suspend the
commitment to make available the JBIC Facility under the circumstances set forth
in Section 3.10 of the Master Participation Agreement.

          (b) JBIC or the JBIC Agent may, by notice to the Borrower terminate
the commitment to make available the JBIC Facility in accordance with Section
10.02.

                                    ARTICLE V

                 INTEREST, COMMITMENT CHARGE AND OVERDUE PAYMENT

          Section 5.01. Interest. The Borrower shall pay interest on the JBIC
Loan for each Interest Period at the rate of (a) in the case of Tranche A, the
Floating Rate for such Interest Period plus (i) prior to the Completion Release
Date 0.875% per annum and (ii) following the Completion Release Date 1.475% per
annum and (b) in the case of Tranche B, the Floating Rate for such Interest
Period plus (i) prior to the Completion Release Date 1.35% per annum and (ii)
following the Completion Release Date 1.85% per annum. Such interest shall be
paid in arrears in respect of the Tranche A Loan and Tranche B Loan on each
Interest Payment Date for each Interest Period.

          Section 5.02. Overdue Payment.

          (a) If the Borrower fails to pay any principal or interest payable
under this Agreement with respect to Tranche A on the due date thereof (such
overdue amount being hereinafter referred to as the "TRANCHE A OVERDUE AMOUNT"),
the Borrower shall pay JBIC interest (hereinafter referred to as the "TRANCHE A
OVERDUE INTEREST") on such Tranche A Overdue Amount for the period from and
including the due date thereof up to and excluding the date of actual receipt of
the payment by JBIC (hereinafter referred to as the "TRANCHE A OVERDUE PERIOD")
on demand, to the fullest extent permitted by applicable law, at the applicable
interest rate and margin set forth in Section 5.01 plus 2% per annum on each
Calculation Date. Such Tranche A Overdue Interest shall accrue after as well as
before judgment and in accordance


                                       -8-



with Section 5.04. Interest at the rate stipulated in Section 5.01 shall not
accrue on any Tranche A Overdue Amount during this Period.

          (b) If the Borrower fails to pay any principal or interest payable
under this Agreement with respect to Tranche B on the due date thereof (such
overdue amount being hereinafter referred to as the "TRANCHE B OVERDUE AMOUNT"),
the Borrower shall pay JBIC interest (hereinafter referred to as the "TRANCHE B
OVERDUE INTEREST") on such Tranche B Overdue Amount for the period from and
including the due date thereof up to and excluding the date of actual receipt of
the payment by JBIC (hereinafter referred to as the "TRANCHE B OVERDUE PERIOD")
on demand, to the fullest extent permitted by applicable law, at the applicable
interest rate and margin set forth in Section 5.01 plus 2% per annum on each
Calculation Date provided that, if JBIC has made a payment to the JBIC Tranche B
Funding Source Banks, under a political risk guarantee issued to such JBIC
Tranche B Funding Source Banks (a "GUARANTEE PAYMENT"), interest on such portion
of the Tranche B Overdue Amount equal to the amount of the Guarantee Payment
shall accrue at a rate per annum equal to the reasonably evidenced costs of
funds to JBIC of funding such Guarantee Payment from time to time, as determined
by JBIC in its sole discretion (if such rate is greater than the applicable
interest rate and margin set forth in Section 5.01(b)), plus 2% per annum. Such
Tranche B Overdue Interest shall accrue after as well as before judgment and in
accordance with Section 5.04. Interest at the rate stipulated in Section 5.01
shall not accrue on any Tranche B Overdue Amount during the Tranche B Overdue
Period.

          (c) Upon request by the Borrower, the JBIC Agent will promptly notify
the Borrower of the Floating Rate so determined by JBIC, provided that the
Borrower's obligation to pay such Tranche A Overdue Interest and Tranche B
Overdue Interest shall not be conditional upon notification of the relevant rate
to the Borrower by the JBIC Agent and such determination by JBIC shall be
conclusive absent manifest error.

          (d) Payment of interest by the Borrower in accordance with clause (a)
above shall not prejudice the right of JBIC to exercise any other of its rights
or claims hereunder, at law or otherwise to remedy any such failure to pay any
amount on the due date for payment hereunder.

          Section 5.03. Commitment Charge.

          (a) The Borrower shall pay to the JBIC Agent in consideration of the
JBIC Loan a commitment charge on the daily unutilized portion of Tranche A, as
such Tranche A may be reduced or terminated as contemplated by Section 2.03 of
the Master Participation Agreement, at the rate of 0.25% per annum, and such
commitment charge shall accrue from and including the date hereof to and
including the Availability Period End Date. Such commitment charge shall be
payable in arrears on each Interest Payment Date and on each date falling three
(3) calendar months after each such Interest Payment Date for the period
commencing on the date hereof (in the case of the first payment of such
commitment charge) or the immediately preceding Interest Payment Date or the
date falling three (3) calendar months thereafter (in the case of each
subsequent payment of such commitment charge) and ending on the day immediately
preceding such subsequent Interest Payment Date or the date falling three (3)


                                       -9-



calendar months thereafter, with the last installment of such commitment charge
to be paid on the Availability Period End Date.

          (b) The Borrower shall pay to the JBIC Agent in consideration of the
JBIC Loan a commitment charge on the daily unutilized portion of Tranche B, as
such Tranche B may be reduced or terminated as contemplated by Section 2.03 of
the Master Participation Agreement, at the rate of 0.25% per annum, and such
commitment charge shall accrue from and including the date hereof to and
including the Availability Period End Date. Such commitment charge shall be
payable in arrears on each Interest Payment Date and on each date falling three
(3) calendar months after each such Interest Payment Date for the period
commencing on the date hereof (in the case of the first payment of such
commitment charge) or the immediately preceding Interest Payment Date or the
date falling three (3) calendar months thereafter (in the case of each
subsequent payment of such commitment charge) and ending on the day immediately
preceding such subsequent Interest Payment Date or the date falling three (3)
calendar months thereafter, with the last installment of such commitment charge
to be paid on the Availability Period End Date.

          Section 5.04. Basis of Calculation.

          (a) Interest on Tranche A shall accrue on a day-to-day basis and be
computed on the basis of a year of three hundred and sixty (360) days and the
actual number of days elapsed (fractional sums of less than one cent (U.S.$0.01)
being disregarded). Notwithstanding anything to the contrary in the Master
Participation Agreement or any other Financing Document, interest on the JBIC
Tranche A Loan shall commence to accrue from the date of the JBIC Disbursement
in Tokyo, Japan and shall cease to accrue only upon receipt by the JBIC Agent of
payment of such interest in New York, New York at the JBIC Agent New York
Repayment Account.

          (b) Interest on Tranche B shall accrue on a day-to-day basis and be
computed on the basis of a year of three hundred and sixty (360) days and the
actual number of days elapsed (fractional sums of less than one cent (U.S.$0.01)
being disregarded). Notwithstanding anything to the contrary in the Master
Participation Agreement or any other Financing Document, interest on the JBIC
Tranche B Loan shall commence to accrue from the date of the JBIC Disbursement
in Tokyo, Japan and shall cease to accrue only upon receipt by the JBIC Agent of
payment of such interest in New York, New York at the JBIC Agent New York
Repayment Account.

          Section 5.05. Up-front Fee. Subject to Section 12.21(e) of the Master
Participation Agreement, the Borrower shall pay to the JBIC Agent in
consideration of the JBIC Loan (i) an up-front fee with respect to the Tranche A
Loans in the amount of 0.85% times the aggregate principal amount of Tranche A
on the earlier of the Closing Date and the date that is 30 (thirty) days after
the date of this Agreement; and (ii) an up-front fee with respect to the Tranche
B Loans in the amount of 1.10% times the aggregate principal amount of Tranche B
on the earlier of the Closing Date and the date that is 30 (thirty) days after
the date of this Agreement.


                                      -10-



          Section 5.06. Agency Fee. The Borrower shall pay to the JBIC Agent in
respect of this Agreement, the Master Participation Agreement and any other
Financing Documents all fees provided for in the fee letters executed between
the Borrower and the JBIC Agent, the amount and method of payment of which shall
be agreed separately in such fee letters.

          Section 5.07. Promissory Notes. (a) As additional evidence of the
Borrower's obligation to pay the principal of the JBIC Loans as provided in
Section 4.01 hereof, the Borrower shall execute and deliver to the JBIC Agent on
behalf of JBIC Promissory Notes issued by the Borrower, in substantially the
form set forth in Annex H, with a dual column translation into Spanish to be
included therein, in accordance with Section 2.08 of the Master Participation
Agreement.

          (b) The execution and delivery by the Borrower of the Promissory Notes
shall not affect in any way whatsoever the rights or obligations of the Borrower
under this Agreement, and the right and claims of JBIC under the Promissory
Notes held by it shall not replace or supersede the rights and claims of JBIC
hereunder, provided that payment of any part of the principal of any such
Promissory Note in accordance with the terms of this Agreement shall, to the
extent that such payment if made hereunder would discharge the Borrower's
obligations hereunder in respect of the payment of the principal of the JBIC
Loan evidenced by such Promissory Note, discharge pro tanto and the payment of
any principal of a JBIC Loan in accordance with the terms and conditions hereof
shall discharge the obligations of the Borrower under the Promissory Note
evidencing such JBIC Loan to the extent of such payment.

                                   ARTICLE VI

                              PAYMENTS AND CURRENCY

          Section 6.01. Place and Time of Payment. (a) All payments shall be
made in accordance with the Payment Procedures set forth in Annex G (or such
other payment procedures as may be agreed by the parties from time to time).

          (b) All payments to be made by the Borrower under this Agreement and
the Promissory Notes shall be paid in the Eligible Currency (or, if made
pursuant to Article XII, in the Relevant Currency) in immediately available
funds to the JBIC Agent at the JBIC Agent New York Repayment Account. In all
cases payment shall be required to be made to the JBIC Agent no later than 11:00
a.m., New York time, on the relevant Payment Date. Any payment made on such due
date but after such time shall be deemed to have been made on the immediately
succeeding Business Day, and Tranche A Overdue Interest pursuant to Section
5.02(a) and Tranche B Overdue Interest pursuant to Section 5.02(b) shall accrue
and be payable upon any payment so made. So long as the JBIC Agent receives each
such payment by 11:00 a.m., New York time, the JBIC Agent shall transfer such
funds to (i) JBIC at the JBIC New York Repayment Account and (ii) to the Tranche
B Funding Source Banks to such account as may be designated from time to time by
each of the Tranche B Funding Source Banks, in each case on the same Business
Day no later than 12:00 p.m., New York time.


                                      -11-



          Section 6.02. Payments to be Free of Claims and Taxes. Section 3.09 of
the Master Participation Agreement, as qualified by Section 12.13 of the Master
Participation Agreement, is incorporated by reference as is fully set forth
herein.

          Section 6.03. Payments in Eligible Currency. The obligation of the
Borrower hereunder to make payments in the Eligible Currency or the Relevant
Currency, as the case may be, shall not be discharged or satisfied by any
amount, tender or recovery (whether pursuant to any judgment or otherwise)
expressed, paid or made in or converted into any currency other than the
Eligible Currency or the Relevant Currency, as the case may be, except to the
extent to which such amount, tender or recovery so expressed, paid, made or
converted shall result in the effective receipt by JBIC of the full amount of
the Eligible Currency or the Relevant Currency, as the case may be, payable to
JBIC hereunder at any relevant time and accordingly the primary obligation of
the Borrower shall be enforceable as an alternative or additional cause of
action for the purpose of recovery in the Eligible Currency or the Relevant
Currency, as the case may be, of the amount (if any) by which such effective
receipt shall fall short of the full amount of the Eligible Currency or the
Relevant Currency, as the case may be, payable hereunder, and shall not be
affected by judgment being obtained for any other sum due under this Agreement.

          Section 6.04. Payment to be made on Business Day. If any payment to be
made by the Borrower hereunder falls due on any day which is not a Business Day,
such payment shall be made on the immediately following Business Day and the
amount of interest shall be adjusted accordingly.

          Section 6.05. Borrower Acknowledgment. The Borrower hereby
acknowledges and agrees that any assignee of or a holder of a participation or
other interest in the JBIC Loan (including each of the JBIC Tranche B Funding
Source Banks) shall be entitled through the JBIC Agent and without duplication
to the rights and benefits under each of Sections 6.02, 12.01, 12.02, 12.03 and
12.04 of this Agreement and Sections 3.11, 3.12 and 12.21 of the Master
Participation Agreement, as if each such provision named, and operated directly
in favor, of such assignee or holder.

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

          Section 7.01. Representations and Warranties. The Borrower has given
certain representations and warranties set forth in Article VI of the Master
Participation Agreement. The rights of JBIC in respect of such representations
and warranties are set forth in the Master Participation Agreement and the
Master Security Agreement.

          Section 7.02. JBIC Environmental Guidelines. The Borrower represents
and warrants that except as disclosed in Annex I, as of the date hereof and as
of the Closing Date, the construction activities conducted in connection with
the Sulfide Project and the operations and properties of the Borrower are in
compliance with the JBIC Environmental Guidelines, except for any immaterial
issues of non-compliance of which the Borrower is not specifically aware and as
to which no remedial action has been requested by any applicable Governmental
Authority.


                                      -12-



                                  ARTICLE VIII

                                    COVENANTS

          Section 8.01 Master Participation Agreement Covenants. The Borrower
has undertaken certain covenants as set forth in Article VII of the Master
Participation Agreement. The rights of JBIC in respect of such covenants are set
forth in the Master Participation Agreement and the Master Security Agreement.

                                   ARTICLE IX

                     ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

          Section 9.01. Environmental and Social Considerations.

          (a) The Borrower shall construct the Sulfide Project and operate the
Business in compliance with the JBIC Environmental Guidelines. If, due to
unforeseen circumstances, the Borrower learns that it is not in compliance with
the JBIC Environmental Guidelines, the Borrower shall promptly report such
non-compliance to JBIC.

          (b) The Borrower shall implement and maintain an environmental
monitoring program which monitors the environmental compliance of the Borrower
and its Business in accordance with Section 7.23 of the Master Participation
Agreement. The Borrower shall, upon JBIC's reasonable request, report to JBIC on
measures and monitoring related to environmental and social considerations
(hereinafter referred to as the "ENVIRONMENTAL AND SOCIAL CONSIDERATIONS")
undertaken by the Borrower in connection with its compliance with the JBIC
Environmental Guidelines (including, to the extent applicable, on the results of
discussions with stakeholders of the Business held in accordance with clause (c)
below). Such report shall be in form and substance reasonably satisfactory to
JBIC and shall address, among other matters, measures taken by the Borrower with
respect to air pollution, water pollution and disposal of wastes as they relate
to the Business. From and after the date of Start-up of Commercial Production,
the Borrower shall provide an annual environmental compliance report, in the
form attached hereto as Annex D, by no later than March 31st of each year. The
Borrower shall provide promptly upon request such other items as may be
reasonably requested in writing from time to time by JBIC or the JBIC Agent with
respect to the Borrower's compliance with Applicable Environmental Laws and the
JBIC Environmental Guidelines.

          (c) If any problems regarding the Environmental and Social
Considerations arise, the Borrower shall make reasonable efforts for discussions
to be held between the Borrower and stakeholders of the Business (including, to
the extent applicable, local residents and local NGOs affected by the Project).

          (d) When the Government of the Republic of Peru (including local
governments) and other stakeholders of the Business have important roles to play
in terms of the Environmental and Social Considerations, the Borrower shall
endeavor to enter into agreements with such parties.


                                      -13-



          (e) If JBIC reasonably believes that the Borrower is not in compliance
with the JBIC Environmental Guidelines, JBIC or the JBIC Agent shall have the
right to notify the Borrower of the same and to request discussion with the
Borrower concerning such non-compliance. If, following discussion of such
non-compliance, JBIC continues to reasonably believe that the Borrower is not in
compliance with the JBIC Environmental Guidelines, JBIC shall have the right to
require that the Borrower permit JBIC, any environmental consultant chosen by
JBIC or any agent or representative thereof access to the Project Property, in
each case (i) at the expense of the Borrower and (ii) subject to the
confidentiality provisions set forth in Section 15.01.

          Section 9.02. Effect of Breach of Environmental and Social
Considerations. If the Borrower is in breach in any material respect of its
obligations under Section 9.01, then, after consultation between JBIC and the
Borrower, JBIC may send to the Borrower a notice of such breach (an "ALLEGED
BREACH NOTICE"). Thereafter, JBIC shall have the right to require that the
Borrower permit JBIC, any environmental consultant chosen by JBIC or any agent
or representative thereof access to the Project Property, (i) in each case at
the expense of the Borrower and (ii) subject to the confidentiality provisions
set forth in Section 15.01. If such breach remains uncured within ninety (90)
days after the receipt by the Borrower of an Alleged Breach Notice, JBIC or the
JBIC Agent may, by notice to the Borrower, declare that a JBIC Event of Default
has occurred in accordance with Section 10.01(c)(iii). Notwithstanding the
foregoing, the parties acknowledge that neither JBIC nor the JBIC Agent shall
have the right to declare the occurrence of a JBIC Event of Default, if the
Borrower has within such ninety (90) day period adopted a plan reasonably
acceptable to JBIC to cure such breach and thereafter diligently implements such
plan.

                                    ARTICLE X

                           EVENTS OF DEFAULT; REMEDIES

          Section 10.01. Events of Default. (a) Article IX of the Master
Participation Agreement is incorporated by reference herein as if fully set
forth herein in accordance with their terms, unless waived in accordance with
the Master Participation Agreement.

          (b) Upon the occurrence and Continuance of an MPA Event of Default,
JBIC shall have each of the rights and remedies provided in Article V of the
Master Security Agreement exercisable only pursuant and in accordance to the
terms thereof.

          (c) Each of the following events shall be a "JBIC EVENT OF DEFAULT"
under this Agreement:

                    (i) if the SMM Concentrate Sales Agreement is terminated or
cancelled for any reason or amended, supplemented or otherwise modified to
reduce the quantity of minimum annual purchases thereunder or to reduce the term
thereof, and the same is not replaced within one hundred eighty (180) days with
equivalent arrangements acceptable to JBIC with customers in Japan;


                                      -14-



                    (ii) if either SC or SMM is in breach of its obligations
under Section 2.01(c) of the Transfer Restrictions Agreement or the Sumitomo
Participant (or any Sumitomo Affiliate Transferee) makes or permits a Transfer
of its Restricted Common Stock that requires the prior written consent of JBIC
in accordance with Section 2.02(d) of the Transfer Restrictions Agreement
without the prior written consent of JBIC; or

                    (iii) if at any time (i) JBIC shall declare the existence of
a JBIC Event of Default in accordance with the requirements of Section 9.02 or
(ii) the representation and warranty made by the Borrower under Section 7.02
shall prove to have been false when made in any material respect and is not
corrected or cured within ten (10) Business Days after notice from JBIC or the
JBIC Agent specifying such breach and requesting that it be remedied.

          Section 10.02. Consequences of JBIC Event of Default. Upon the
occurrence of a JBIC Event of Default pursuant to Section 10.01, JBIC or the
JBIC Agent (acting on behalf of JBIC) may, by notice to the Borrower, take the
following actions, so long as such actions are taken concurrently: (i) terminate
its commitment to make available the JBIC Facility and (ii) declare the JBIC
Loan then outstanding, together with accrued interest and any other charges
thereon, to be immediately due and payable.

                                   ARTICLE XI

                              CONDITIONS PRECEDENT

          Section 11.01. Conditions Precedent to Initial Disbursement. The
obligation of JBIC to make the initial JBIC Disbursement under this Agreement
shall be subject to (a) the fulfillment, in a manner satisfactory to JBIC, prior
to or concurrently with the making of such initial JBIC Disbursement, of the
conditions precedent set forth in Section 5.01 of the Master Participation
Agreement (or waiver thereof in accordance with Section 5.01 of the Master
Participation Agreement), which conditions are incorporated by reference herein
as if fully set forth herein; (b) the fulfillment of the conditions set out in
clause (1) of Annex A attached hereto (or waiver thereof by JBIC in accordance
with Section 5.01 of the Master Participation Agreement); and (c) with respect
to any JBIC Disbursement of Tranche B, the JBIC Agent shall have received the
corresponding portion of Tranche B from each JBIC Tranche B Funding Source Bank.

          Section 11.02. Conditions to Subsequent JBIC Disbursements. The
obligation of JBIC to make any JBIC Disbursement under this Agreement subsequent
to the initial JBIC Disbursement shall be subject to (a) the fulfillment, in a
manner satisfactory to the Requisite Lenders, prior to or concurrently with the
making of such JBIC Disbursement, of the conditions precedent set forth in
Section 5.02 of the Master Participation Agreement (or waiver thereof in
accordance with Section 5.02 of the Master Participation Agreement), which
conditions are incorporated by reference herein as if fully set forth herein;
(b) the fulfillment of the conditions set out in paragraph (1) of Annex A
attached hereto (or waiver thereof in accordance with Section 5.02 of the Master
Participation Agreement); and (c) with respect to any JBIC Disbursement of
Tranche B, the JBIC Agent shall have received the corresponding portion of
Tranche B from each JBIC Tranche B Funding Source Bank.


                                      -15-



                                   ARTICLE XII

                            TAXES, FEES AND EXPENSES

          Section 12.01. Indemnification for Taxes, Fees and Expenses. The
Borrower shall pay or cause to be paid and shall indemnify JBIC and the JBIC
Agent against:

          (a) Without duplication of the Borrower's obligations under Section
12.21 of the Master Participation Agreement, the Borrower agrees (i) to pay or
reimburse each of JBIC and the JBIC Agent for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the negotiation,
preparation, execution, delivery, waiver or modification of this Agreement and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, any documentary taxes and the reasonable
fees, disbursements and other charges of external counsel to each of JBIC and
the JBIC Agent, and (ii) to pay or reimburse each of JBIC and the JBIC Agent for
all its reasonable costs and expenses incurred in connection with any amendment,
supplement or modification to, or waiver in respect of this Agreement, or its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, including, without limitation, the
reasonable fees, disbursements and other charges of external counsel, provided
in each case JBIC or the JBIC Agent shall first have provided the Borrower with
a receipt and supporting documentation certifying the amount of such costs and
expenses and that the relevant amounts shall be due and payable 30 days
thereafter. The agreements in this Section shall survive repayment of the
Advances, provided that no claims shall be made by JBIC or the JBIC Agent under
this Section after the first anniversary of the termination of this Agreement
and repayment of the Advances and all other amounts payable hereunder.
Notwithstanding the foregoing, and subject to Section 3.01 hereof, the Borrower
shall have no obligation to indemnify either JBIC or the JBIC Agent against any
losses, liabilities, obligations, damages, penalties, actions, judgments, suits,
costs, disbursements, or expenses arising out of the failure of JBIC or the JBIC
Agent, as the case may be, upon satisfaction of all conditions set forth in
Article XI, to disburse the amount required to be disbursed hereunder.

          (b) Without duplication of the Borrower's obligations under Section
12.21 of the Master Participation Agreement, the Borrower shall indemnify the
JBIC Agent and JBIC, and each Related Party of the JBIC Agent or JBIC (each an
"Indemnitee") from, and hold each Indemnitee harmless against, any and all
losses, claims, damages, liabilities and related expenses (other than Excluded
Taxes), including the reasonable and documented fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, the performance by the parties hereto
or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) the JBIC
Loan or the use of the proceeds therefrom or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are incurred by reason of the
negligence or willful misconduct of such Indemnitee; provided further that in
each case JBIC or the JBIC Agent shall first have provided the Borrower with a
certificate


                                      -16-



setting forth the amount of such losses, claims, damages, liabilities and
related expenses, together with reasonable evidence of payment therefore.

          Section 12.02. Relevant Currency. All amounts payable by the Borrower
under this Article XII in respect of any tax, duty, penalty, fee, expense,
charge, interest, loss, cost or liability shall be payable in the currency in
which such tax, duty, penalty, fee, expense, charge, interest, loss, cost or
liability is denominated or, if JBIC or the JBIC Agent shall so request, in any
other currency at the current exchange rate specified by JBIC or the JBIC Agent
(such denominated or other currency, the "RELEVANT CURRENCY").

                                  ARTICLE XIII

                         GOVERNING LAW AND JURISDICTION

          Section 13.01. GOVERNING LAW. IN ACCORDANCE WITH SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW, THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          Section 13.02. Good Faith Consultation. The parties hereto undertake
to use good faith efforts to resolve any dispute arising out of or in connection
with this Agreement through consultation in good faith and mutual understanding,
provided that such consultation shall not prejudice the exercise of any right or
remedy of either party hereto by any such party in respect of any such dispute.

          Section 13.03. Submission to Jurisdiction. The provisions of Section
12.16 of the Master Participation Agreement are incorporated by reference herein
as if fully set forth herein.

          Section 13.04. WAIVER OF TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE ACTIONS OF ANY
OTHER PERSON PARTY HERETO OR THERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

                                   ARTICLE XIV

                                   JBIC AGENT

          Section 14.01. Appointment of JBIC Agent. JBIC hereby appoints
Sumitomo Mitsui Banking Corporation to act as JBIC's agent in connection
herewith, the Master Participation Agreement and any other related agreements to
which JBIC and the JBIC Agent are parties, and any other Financing Document and
authorizes the JBIC Agent to exercise such rights, powers and discretions as are
specifically delegated to the JBIC Agent by the terms hereof and thereof
together with all such rights, powers and discretions as are reasonably
incidental


                                      -17-



thereto. The Borrower hereby acknowledges that JBIC has irrevocably appointed
and authorized the JBIC Agent to act on its behalf in all matters related to
this Agreement, the Master Participation Agreement, the other Financing
Documents and any other related agreement to which JBIC and the JBIC Agent are
parties. The JBIC Agent shall be obligated to perform only those duties and
responsibilities specifically set out in this Agreement, any other Financing
Documents and any other related Agreement to which JBIC and the JBIC Agent are
parties, and the parties hereto agree that there shall be no implied covenants
or obligations arising under this Agreement or any other Financing Document on
the part of the JBIC Agent.

          Section 14.02. Tax Certification. The JBIC Agent shall, from time to
time following receipt of a written request therefor by the Borrower, furnish to
the Borrower a certification as to the fact that the JBIC Agent is "unrelated"
to the Borrower, in the form set forth in Annex F, and any other certification
as may be necessary under Peruvian law to qualify for a reduced rate of
withholding tax.

                                   ARTICLE XV

                                  MISCELLANEOUS

          Section 15.01. Confidentiality.

          (a) Each party to this Agreement shall maintain the confidentiality of
all information disclosed to it concerning this Agreement and the JBIC Facility
and shall, unless otherwise required by law, not voluntarily disclose it without
the prior written consent of the other parties hereto to anyone other than to
the directors, officers, employees, accountants, consultants, counsel and
representatives of the parties hereto, or any proposed transferee of the Tranche
B Loan with a reasonable need to know such information (provided, in the case of
such a proposed transferee or participant, that such transfer is permissible
under this Agreement and provided further, in a proposed transferee or
participant, the proposed transferee or participant, as the case may be, first
agrees in writing to be subject to this Section 15.01), except that this
provision shall not prevent the parties from disclosing information that (i)
becomes generally available to the public other than as a result of a disclosure
by such Person or its representatives in violation of this Agreement, (ii) is or
becomes available to such Person on a non-confidential basis from a source other
than the parties hereto when such source is entitled to make such disclosure or
(iii) subject to paragraph (c) below, is required to be disclosed in accordance
with any applicable Governmental Rule.

          (b) If such information is so disclosed to any Person, the disclosing
party agrees to instruct such Person to keep such information confidential.

          (c) If such information is required to be disclosed in accordance with
any applicable Governmental Rule, unless specifically prohibited by applicable
law or court order, the disclosing party shall, prior to disclosure thereof, use
its best efforts to notify the other parties hereto of any request for
disclosure of any such information (i) by any Governmental Authority (other than
any such request in connection with an examination of the financial condition of
any Senior Facility Lender) or (ii) pursuant to any legal process, so that in
each case the other parties


                                      -18-



hereto may seek an appropriate protective order to maintain the confidentiality
of such information.

          (d) The agreements in this Section 15.01 shall survive the termination
of this Agreement.

          Section 15.02. No Assignment; Funding. This Agreement shall be binding
upon and inure to the benefit of the Borrower, JBIC and their respective
successors and assigns; provided that the Borrower may not assign any or all of
its rights or obligations hereunder to any Person in any manner whatsoever
without the prior written consent of JBIC. The Borrower acknowledges and agrees
that the Tranche B Loan shall be provided only upon disbursement of the Tranche
B Loan Funds by the JBIC Tranche B Funding Source Banks.

          Section 15.03. No Waiver, Remedies Cumulative. No failure or delay in
exercising on the part of JBIC any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or further exercise thereof, or the exercise of any other right. No waiver
by JBIC hereunder shall be effective unless it is in writing. The rights and
remedies provided herein are cumulative and not exclusive of any other right or
remedy provided by law.

          Section 15.04. Partial Illegality. If at any time any provision hereof
becomes illegal, invalid or unenforceable in any respect under the laws of any
jurisdiction, neither the legality, validity nor enforceability of any other
provision hereof shall in any way be affected or impaired thereby.

          Section 15.05. Communications. Any notice, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder shall be given in the English language and will be duly
given when delivered in writing or sent by electronic mail confirmed by
facsimile transmission (with written confirmation of receipt, which confirmation
may be by facsimile transmission) (provided that a notice sent by electronic
mail shall be duly given only at the time the facsimile transmission confirming
the same is sent) or facsimile transmission (with written confirmation of
receipt, which confirmation may be by facsimile transmission) to a party at its
address and facsimile transmission numbers as indicated below or to such other
address as may be furnished for this purpose by such party (any such
communication that is not in writing shall be confirmed in writing):

If to the Borrower:     Sociedad Minera Cerro Verde S.A.A.
                        Asiento Minero Cerro Verde S/N
                        Uchumayo - Arequipa
                        Peru
                        Attention: General Manager
                        Telephone: (054) 283-363
                        Facsimile: (054) 283-376


                                      -19-



With a copy to PDC, at: Phelps Dodge Tower
                        1 North Central Avenue
                        Phoenix, Arizona 85004
                        U.S.A.
                        Attention: Treasurer
                        Telephone: (602) 366-8100
                        Facsimile: (602) 366-8150

If to JBIC:             Japan Bank for International Cooperation
                        4-1, Ohtemachi 1 - Chome
                        Chiyoda-ku
                        Tokyo, Japan 100 - 8144
                        Attention: Director, Division 1,
                                   Project Finance Department
                        Telephone: +81-3-5218-3812
                        Facsimile: +81-3-5218-3976

If to the JBIC Agent:   Sumitomo Mitsui Banking Corporation
                        Structured Finance Department
                        1-2, Yurakucho 1 - Chome
                        Chiyoda-ku
                        Tokyo, Japan 100 - 0006
                        Attention: Credit Control & Administration Group
                        Telephone: +81-3-3592-8244
                        Facsimile: +81-3-3580-8432

or in each case to such other address as any party hereto may designate by
written notice to the other party hereto.

     Notices, requests, demands or other communications given or made as
aforesaid (i) by registered air mail shall be deemed to have been duly given or
made seven (7) Business Days after being deposited in the mails, and (ii) by
internationally recognized courier service or by facsimile shall be deemed to
have been duly given or made when the internationally recognized courier service
or facsimile or is duly received by the recipient.

          Section 15.06. Use of English Language. All documents to be furnished
or notices, requests or other communications to be given or made under this
Agreement shall, unless specified otherwise in this Agreement, be in the English
language or, if in another language, shall, if JBIC so requests, be accompanied
by a translation into English certified by a representative of the Borrower.

          Section 15.07. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and assigns of the Borrower,
the JBIC Agent and JBIC, except that neither the Borrower nor the JBIC Agent may
assign or otherwise transfer all or any part of its rights or obligations under
this Agreement without the prior written consent of JBIC.


                                      -20-



          Section 15.08. Further Assurances. The Borrower agrees to cooperate
with JBIC in connection with the exercise of any of its rights hereunder and
agrees, promptly upon request by JBIC or the JBIC Agent, to execute, acknowledge
and deliver all further instruments and documents, and take all such further
acts, consistent with legal and regulatory restrictions applicable to the
Borrower, as JBIC or the JBIC Agent may reasonably request from time to time in
order to carry out the purposes hereof or to enable JBIC to exercise and enforce
its rights and remedies hereunder.

          Section 15.09. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.

          Section 15.10. Abbreviation. This Agreement shall be referred to as
the "JBIC LOAN TO CERRO VERDE" in communications between the Borrower and JBIC,
as well as in relevant documents.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -21-



IN WITNESS WHEREOF, the Borrower, JBIC and the JBIC Agent, acting through their
duly authorized representatives, have caused this Agreement to be duly executed
as of the date first written above.

JAPAN BANK FOR INTERNATIONAL COOPERATION:   SOCIEDAD MINERA CERRO VERDE S.A.A.:


By:                                         By:
    -------------------------------------       --------------------------------
Name:                                       Name:
      -----------------------------------         ------------------------------
Title:                                      Title:
       ----------------------------------          -----------------------------


SUMITOMO MITSUI BANKING CORPORATION:


By:
    -------------------------------------
Name:
      -----------------------------------
Title:
       ----------------------------------


                                      -22-



                                                                         ANNEX A

                             DISBURSEMENT PROCEDURES

     Unless otherwise agreed in writing by the parties to this Agreement, JBIC
Disbursements under this Agreement and the Master Participation Agreement shall
be made in accordance with the following procedures:

          1. REQUEST FOR DISBURSEMENT

          1.1 Simultaneously with the execution of this Agreement, the Borrower
shall deliver to JBIC and the JBIC Agent a proposed schedule of disbursement for
the JBIC Loan substantially in the form of Schedule 4 to this Annex A.

          1.2 The Borrower shall, at least fifteen (15) Business Days prior to
the intended date of Disbursement, submit to the JBIC Agent a duly completed
Request for Disbursement substantially in the form of Schedule 1 to this Annex A
signed by the Borrower and accompanied by a duly completed and signed Statement
of Expenditures substantially in the form of Schedule 2 to this Annex A.

          1.3 The Statement of Expenditures shall include the expenditures
already paid by the Borrower as Project Costs or estimated to be paid through
the relevant Disbursement Date. The Statement of Expenditures may also include
the expenditures that are scheduled to be paid by the Borrower during the ninety
(90) day period after the date of the relevant Statement of Expenditures (the
"Estimated Expenditures"), provided that should any Statement of Expenditures
include the Estimated Expenditures, the Borrower shall submit to the JBIC Agent
the revised relevant Statement of Expenditures promptly after such period.

          1.4 In the event that any expenditure shown in a Statement of
Expenditures is incurred in a currency other than the Eligible Currency, such
amounts shall be converted into the Eligible Currency at a rate of exchange
reasonably chosen by the Borrower and used by the Borrower for the preparation
of its financial statements, as set forth in the Statement of Expenditures.

          1.5 The Request for Disbursement and the Statement of Expenditures
shall be reviewed by the JBIC Agent as to its compliance with the provisions of
this Agreement. If the Request for Disbursement will result in breach of any
provision of this Agreement, the JBIC Agent, after consultation with JBIC, may
reject such Request for Disbursement.

          2. DISBURSEMENT

          2.1 Subject to the terms and conditions of this Agreement, including
without limitation, Sections 11.01 and 11.02 and this Annex A, the JBIC Agent
shall, upon its receipt, notify JBIC of the date and the amount of the requested
JBIC Disbursement in a Request for Disbursement. On each Disbursement Date
before the close of business in Tokyo, JBIC shall disburse the Tranche A Loans
to the JBIC Agent Tokyo Disbursement Account and on or prior to 12:00 p.m., New
York time, the JBIC Tranche B Funding Source Banks shall disburse the



Tranche B Loans into the JBIC Agent New York Disbursement Account and the
Disbursement Procedures set forth in Annex G (or such other procedures as may be
agreed by the parties from time to time) shall be observed, provided that, if
the said intended date of the JBIC Disbursement is not a Business Day, such JBIC
Disbursement shall be made on the immediately succeeding Business Day.

          2.2 Notwithstanding the foregoing, JBIC shall be deemed to have made a
JBIC Disbursement to the Borrower at the time when JBIC disburses the Tranche A
Loans to the JBIC Agent Tokyo Disbursement Account and the Tranche B Loans are
disbursed into the JBIC Agent New York Disbursement Account in accordance with
Section 2.1 and shall, as from the date of such disbursement, constitute a valid
and binding obligation upon the Borrower in respect of repayment of the
corresponding amount of the JBIC Loan and the payment of interest and any other
amount payable hereunder in relation thereto, each in accordance with and in the
manner contemplated by this Agreement.

          2.3 No more than one (1) JBIC Disbursement shall be made hereunder in
any calendar month period. In addition, no JBIC Disbursement shall be made
during any thirty (30) day period immediately preceding the date of payment of
commitment charges pursuant to Section 5.03.

          2.4 In the event that the total amount set forth in the Statement of
Expenditures with respect to any JBIC Disbursement is less than the amount of
the JBIC Disbursement requested in the relevant Request for Disbursement, then
the JBIC Disbursement shall be made only up to the amount set forth in such
Statement of Expenditures. Except with respect to the last JBIC Disbursement,
each JBIC Disbursement shall not be less than five hundred thousand Dollars
(U.S.$500,000).

          2.5 Promptly after the JBIC Disbursement is made, the JBIC Agent shall
(i) notify the Borrower of the date and amount of the Disbursement by sending
two (2) original copies of the Table of Disbursements (the "Table of
Disbursements") substantially in the form of Schedule 3 to this Annex A to the
Borrower and (ii) send a copy thereof to JBIC. The Borrower, promptly after
receipt thereof, shall (i) duly acknowledge and confirm such Table of
Disbursements and return one (1) original copy to the JBIC Agent and (ii) send a
copy thereof to JBIC.

          3. GENERAL

     On each day on which a JBIC Disbursement shall be made, the amount of the
Facility shall be reduced by the amount of such JBIC Disbursement.
Notwithstanding any provision of this Agreement to the contrary, JBIC shall not
be required to make any JBIC Disbursement hereunder if, as a result thereof, the
amount of the Facility would thereby be exceeded. JBIC Disbursements will be
made only during the Availability Period.


                                        2



                                                                      Schedule 1

                            Request for Disbursement
                         (Re: JBIC Loan to Cerro Verde)

                                                          Date: ________________
                                                          Serial No.: __________

Sumitomo Mitsui Banking Corporation, as JBIC Agent
[Address]

Attn: [Director]
      [Name of Department]

Dear Sirs:

     Pursuant to Section 1.2 of Annex A to the JBIC Loan Agreement dated Ocotber
5th, 2005 among Japan Bank for International Cooperation, as Lender, Sociedad
Minera Cerro Verde S.A.A., as Borrower, and Sumitomo Mitsui Banking Corporation,
as JBIC Agent (the "JBIC Loan Agreement") (JBIC Loan to Cerro Verde) (terms
defined in the JBIC Loan Agreement (including those defined by reference to the
Master Participation Agreement referred to therein) have the same meaning
herein), we hereby request JBIC to disburse the amount specified below.

Date of JBIC Disbursement:

Disbursement Amount in the Eligible Currency:   Tranche A [____________]
                                                Tranche B [____________]

     Please make a JBIC Disbursement of the above-mentioned amount by means of a
telegraphic transfer into the following account.

Bank Name/Branch Name:  Sumitomo Mitsui Banking Corporation
Address of the Branch:
Account Name/Account Number:
Reference:
Attn:

     The current outstanding principal amount of the [JBIC Loan] excluding the
amount set forth in this Request for Disbursement is:

                                                Tranche A: [____________]
                                                Tranche B: [____________]

     We enclose the Statement of Expenditures specifying the above-mentioned
amount for the JBIC Disbursement.


                                        3



     We hereby certify (i) that no Default has occurred and is continuing or
would result from the making of such Disbursement (ii) that such JBIC
Disbursement is in accordance with the Table of Disbursements (attached hereto
as Schedule 3), (iii) that the proceeds of such JBIC Disbursement are (a) to be
used solely to pay expenditures (x) already paid by the Borrower as Project
Costs, (y) estimated to be paid through the relevant Disbursement Date, or (z)
that are scheduled to be paid by the Borrower as Project Costs during the ninety
(90) day period after the relevant Disbursement Date and (b) are necessary to
pay such Project Costs already paid, due or projected to become due within
ninety (90) days after such Requested Disbursement Date (other than in cases of
Punchlist Items on the final JBIC Disbursement), and (iv) that each of the
conditions precedent set forth in Section [5.01/5.02(2)] of the Master
Participation Agreement has been satisfied or waived.

                                         Yours faithfully,

                                         Sociedad Minera Cerro Verde S.A.A.


                                         ---------------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

- ----------
(2)  This reference should be Section 5.01 in case of the initial disbursement
     and Section 5.02 in case of all subsequent disbursements.


                                        4



                                                                      Schedule 2

                            Statement of Expenditures
                         (Re: JBIC Loan to Cerro Verde)

                                                               Date:____________
                                                              Serial No.________

Sumitomo Mitsui Banking Corporation, as JBIC Agent
[Address]

Attn: [Director]
      [Name of Department]

Dear Sirs:

     Pursuant to Section 1.3 of Annex A to the JBIC Loan Agreement dated
September 30th, 2005 between Japan Bank for International Cooperation, as
Lender, Sociedad Minera Cerro Verde S.A.A., as Borrower and Sumitomo Mitsui
Banking Corporation, as JBIC Agent (the "JBIC Loan Agreement") (JBIC Loan to
Cerro Verde) (terms defined in the JBIC Loan Agreement (including those defined
by reference to the Master Participation Agreement referred to therein) having
the same meaning herein) and in relation to the disbursement requested to be
made on ____________, 20__, we hereby submit to you our Statement of
Expenditures.

                                         Yours faithfully,

                                         Sociedad Minera Cerro Verde S.A.A.


                                         ---------------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------



                                                                      Schedule 2

                            Statement of Expenditures
                           (JBIC Loan to Cerro Verde)

                                                                                       
      1             2                 3                  4                   5                  6                 7
Name of Payee  Category of  Brief Description of  Date of Payment  Amount in Currency of  Exchange Rate    Amount in [the
               Expenditure  Payment                                Expenditure                           Eligible Currency]




                          
(A) Total                    *

(B) Amount to be disbursed   *



                                        Sociedad Minera Cerro Verde S.A.A.

                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

Remarks:

     Please insert the amount denominated in the Eligible Currency.



                                                                      Schedule 3

                                                      (JBIC Loan to Cerro Verde)
                                                       No. _____________________

                                                       Date: ___________________

                             Table of Disbursements

                           (JBIC Loan to Cerro Verde)

Dear Sirs:

     We are sending herewith two (2) copies of the Table of Disbursements
concerning the captioned JBIC Loan.

     The said Table of Disbursements shall be conclusive and binding in the
absence of manifest error.

                                        Yours faithfully,

                                        Sumitomo Mitsui Banking Corporation, as
                                        JBIC Agent


                                        By:
                                            ------------------------------------
                                        Title:
                                               ---------------------------------

Acknowledged and confirmed
Sociedad Minera Cerro Verde S.A.A.


By
   ----------------------------------
   (authorized signature)



                                                      (Attachment to Schedule 3)

                    JAPAN BANK FOR INTERNATIONAL COOPERATION

                             TABLE OF DISBURSEMENTS

                          for JBIC Loan to Cerro Verde

                                                (Amounts expressed in _________)



                                                                Outstanding
  Date of                                                    Balance (Total of
    JBIC                Amount            Amount Disbursed      Tranche A          Remarks as of
Disbursement      Disbursed Tranche A         Tranche B       and Tranche B)       previous month
- ------------   ------------------------   ----------------   -----------------   ----------------
                                                                     








Total                                                                            as of this month




                                                           Schedule 4 to Annex A

                       JBIC Proposed Disbursement Schedule



                     Amount for Disbursement   Amount for Disbursement
Disbursement Date           Tranche A                 Tranche B
- -----------------    -----------------------   -----------------------
                                         
November 2005                9,625,000                 4,125,000
March 2006                  43,312,500                18,562,500
June 2006                   33,687,500                14,437,500
September 2006              43,312,500                18,562,500
January 2007                43,312,500                18,562,500
                           -----------                ----------
Total Amount U.S.$         173,250,000                74,250,000
                           ===========                ==========




                                                                         ANNEX B

                         Amortization Schedule



               PERCENTAGE   PERCENTAGE   AMOUNT (U.S.$)   AMOUNT (U.S.$)
PAYMENT NO.     TRANCHE A    TRANCHE B     TRANCHE A*       TRANCHE B*
- ------------   ----------   ----------   --------------   --------------
                                              
      1.          6.25%        6.25%
      2.          6.25%        6.25%
      3.          6.25%        6.25%
      4.          6.25%        6.25%
      5.          6.25%        6.25%
      6.          6.25%        6.25%
      7.          6.25%        6.25%
      8.          6.25%        6.25%
      9.          6.25%        6.25%
     10.          6.25%        6.25%
     11.          6.25%        6.25%
     12.          6.25%        6.25%
     13.          6.25%        6.25%
     14.          6.25%        6.25%
     15.          6.25%        6.25%
     16.          6.25%        6.25%
                  ----         ----
Total Amount
   U.S.$           100%         100%
                  ====         ====


- ----------
*    To be inserted on the Availability Period End Date


                                       B-1



                                                                         ANNEX C

                              DISBURSEMENT ACCOUNTS

JBIC Agent New York Disbursement Account

Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: SMBCJPJT)
Reference: Payment for Cerro Verde
           (Attn: Capital Markets and Treasury Operations Department)
Account Bank: Sumitomo Mitsui Banking Corporation, New York Branch
Account Number: 895002

JBIC Agent Tokyo Disbursement Account

Account Name:  Sumitomo Mitsui Banking Corporation, Tokyo (Swift: SMBCJPJT)
Reference: Payment for Cerro Verde
           (Attn: Capital Markets and Treasury Operations Department)
Account Bank: JP Morgan Chase Bank, Tokyo Branch
Account Number: 0141503300

                               REPAYMENT ACCOUNTS

JBIC Agent New York Repayment Account

Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: SMBCJPJT)
Reference: Payment for Cerro Verde
           (Attn: Capital Markets and Treasury Operations Department)
Account Bank: Sumitomo Mitsui Banking Corporation, New York Branch
Account Number: 895002

JBIC New York Repayment Account

Account Name: Japan Bank for International Cooperation
Reference: Cerro Verde
Account Bank: Bank of Tokyo-Mitsubishi Trust Company
Account Number: 26019442


                                       C-1



                                                                         ANNEX D

                          Environmental Monitoring Form
                           (JBIC Loan to Cerro Verde)

                                                              Date: ____________

To: Japan Bank for International Cooperation
    4-1, Ohtemachi 1-chome
    Chiyoda-ku, Tokyo 100-8144, Japan
    Attn: Director General
    Energy and Natural Resources Finance Department

     Dear Sirs:

     As required by Section 9.01(b) of the JBIC Loan Agreement dated September
     30th, 2005 between Japan Bank for International Cooperation, as Lender,
     Sociedad Minera Cerro Verde S.A.A., as Borrower, and Sumitomo Mitsui
     Banking Corporation, as JBIC Agent (JBIC Loan to Cerro Verde), please find
     enclosed the environmental monitoring form prepared by the Borrower for the
     year ended on December 31, [____].

     In addition, except as disclosed below, we hereby certify that, as of the
     date hereof, the Borrower is not aware of any violation of the JBIC
     Environmental Guidelines.

                                        Yours faithfully,


                                        ----------------------------------------


                                       D-1



                          ENVIRONMENTAL MONITORING FORM

1. WATER QUALITY (SURFACE WATER; CHILI RIVER, WATER INTAKE POINT)



                                                  EFFLUENT LIMITATIONS
                           MEASURED    MEASURED   --------------------      REMARKS
                            VALUE       VALUE       MAXIMUM   AVERAGE     (FREQUENCY,
    ITEM         UNIT     (AVERAGE)   (MAXIMUM)      DAILY    MONTHLY    METHOD, ETC.)
- -----------   ---------   ---------   ---------     -------   -------    -------------
                                                       
pH            --
EC            mS/cm
Temperature   degrees C
Acidity       mg/L                                                       (CaCO3)
Alkalinity    mg/L
TDS           mg/L
TSS           mg/L


2. WATER QUALITY (GROUNDWATER; DOWNSTREAM OF WASTE ROCK DUMP PLACE)



                            MEASURED    MEASURED                             REMARKS
                             VALUE       VALUE           REFERRED          (FREQUENCY,
    ITEM          UNIT     (AVERAGE)   (MAXIMUM)    STANDARDS/CRITERIA    METHOD, ETC.)
- ------------   ---------   ---------   ---------   --------------------   -------------
                                                        
Water Level
pH             --
DO
EC             mS/cm
Temperature    degrees C
Acidity        mg/L                                                       (CaCO3)
Alkalinity     mg/L
TDS            mg/L
TSS            mg/L
Total Metals   mg/L
Sulfates       mg/L


3. WATER QUALITY (GROUNDWATER; DOWNSTREAM OF TAILINGS DAM)



                              MEASURED    MEASURED                             REMARKS
                               VALUE       VALUE           REFERRED          (FREQUENCY,
    ITEM            UNIT     (AVERAGE)   (MAXIMUM)    STANDARDS/CRITERIA    METHOD, ETC.)
- ------------     ---------   ---------   ---------   --------------------   -------------
                                                          
Water Level
pH               --
DO
EC               mS/cm
Temperature      degrees C
Acidity          mg/L                                                       (CaCO3)
Alkalinity       mg/L
TDS              mg/L
TSS              mg/L
Total Metals     mg/L
Total Nutrient   mg/L



                                        1



                                                                         ANNEX E

                    JAPAN BANK FOR INTERNATIONAL COOPERATION
                         GUIDELINES FOR CONFIRMATION OF
                     ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

                                   APRIL 2002

                    JAPAN BANK FOR INTERNATIONAL COOPERATION



PREFACE

Japan Bank for International Cooperation (hereinafter referred to as "JBIC")
establishes and makes public "JBIC Guidelines for Confirmation of Environmental
and Social Considerations" (hereinafter referred to as the "Guidelines") with
the objective of contributing to efforts by the international community,
particularly developing regions, towards sustainable development, through
consideration of the environmental and social aspects in all projects
(hereinafter referred to as "project" or "projects") subject to lending or other
financial operations (hereinafter collectively referred to as "funding") by
JBIC. Environmental and social considerations refer not only to the natural
environment, but also to social issues such as involuntary resettlement and
respect for the human rights of indigenous peoples (hereinafter collectively
referred to as "environment"). The Guidelines apply commonly to JBIC's
International Financial Operations and Overseas Economic Cooperation Operations.

The Guidelines have been formulated on the basis of Japan's approach to
international co-operation in environmental conservation, discussions about the
international framework on environmental and social considerations and human
rights, and discussions held at the Organisation for Economic Co-Operation and
Development (OECD) regarding common approaches to the environment and public
export credits, which requires consistency between public export credit policies
and environmental conservation policies, and also regarding good environmental
practices of the Development Assistance Committee (DAC) and other issues. The
Guidelines will be reviewed as necessary in future, taking into account future
progress made in these areas.

While encouraging appropriate consideration of the environment and social
aspects in projects subject to funding, it is JBIC's policy to provide active
support to projects that promote environmental conservation and to projects that
contribute to the protection of the global environment, such as projects to
reduce greenhouse gas emissions. JBIC also has a policy of being actively
involved in the support of enhancing environmental and social considerations in
developing countries.


                                       2



GUIDELINES

                                    Contents



                                                                                                Page
                                                                                                ----
                                                                                             
Part 1
1. JBIC's Basic Policies Regarding Confirmation of Environmental and Social Considerations ..     3
2. Objectives and Meaning of the Guidelines .................................................     4
3. Basic Principles Regarding Confirmation of Environmental and Social Considerations .......     4
4. Procedures for Confirmation of Environmental and Social Considerations ...................     6
5. Disclosure of Information Regarding Confirmation of Environmental and Social
Considerations by JBIC ......................................................................     9
6. Taking Environmental Reviews into Account for Decision-making and Loan
Agreements ..................................................................................    11
7. Ensuring Appropriate Implementation of and Compliance with the Guidelines ................    11
8. Implementation and Review of the Guidelines ..............................................    12

Part 2(NB)
1. Environmental and Social Considerations Required for Funded Projects .....................    13
2. EIA Reports for Category A Projects ......................................................    17
3. Illustrative List of Sensitive Sectors, Characteristics and Areas ........................    20
4. Information Required for Screening Process ...............................................    22
5. Checklist Categories and Items ...........................................................    23
6. Items Requiring Monitoring ...............................................................    24


NB: Part 2 is inseparable from Part 1.


                                       3



[PART 1]

1. JBIC'S BASIC POLICIES REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS

JBIC confirms that project proponents are undertaking appropriate environmental
and social considerations, through various measures, so as to prevent or
minimize the impact on the environment and local communities which may be caused
by the projects for which JBIC provides funding, and not to bring about
unacceptable effects. It will thus contribute to the sustainable development of
developing regions.

In its confirmation of environmental and social considerations, JBIC places
importance on dialogue with the host country (including local governments),
borrowers and project proponents (hereinafter collectively referred to as
"borrowers and related parties") regarding environmental and social
considerations, while respecting the sovereignty of the host country. It also
takes note of the importance of transparent and accountable processes, as well
as the participation in those processes of stakeholders in the project
concerned, including local residents and local NGOs affected by the project
(hereinafter referred to as "stakeholders"). JBIC makes clear in its Guidelines
the environmental and social considerations required for projects to receive
JBIC's funding, and confirms those environmental and social considerations.

In making its funding decisions, JBIC conducts screenings and reviews of
environmental and social considerations to confirm that the requirements are
duly satisfied.

JBIC makes the utmost efforts to ensure that appropriate environmental and
social considerations are undertaken, in accordance with the nature of the
project for which JBIC provides funding, as stated in the Guidelines, through
such means as loan agreements.

Following funding decisions, if necessary, JBIC will monitor or take steps over
a certain period of time to encourage borrowers and related parties to ensure
that appropriate environmental and social considerations are undertaken.

In cases where it is involved in the planning and preparatory stages of a
project, JBIC will take steps to encourage borrowers and related parties to
undertake appropriate environmental and social considerations from the earliest
stage possible.


                                        1



JBIC consistently strives to improve its organizational structure and
operational capacity to achieve sufficient and effective confirmation of
environmental and social considerations.

2. OBJECTIVES AND MEANING OF THE GUIDELINES

The objective of the Guidelines is to encourage project proponents to implement
appropriate environmental and social considerations in accordance with the
Guidelines, by making clear its procedures (both before and after funding
decisions are made), criteria for decision-making and requirements which
projects subject to funding are to meet. In so doing, JBIC endeavors to ensure
transparency, predictability and accountability in its confirmation of
environmental and social considerations.

3. BASIC PRINCIPLES REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS

(1) Parties Responsible for Environmental and Social Considerations The project
proponents are responsible for environmental and social considerations for the
project. JBIC confirms such considerations in light of the Guidelines. JBIC
encourages project proponents seeking funding from JBIC to undertake appropriate
environmental and social considerations in accordance with the nature of the
project, based on the principles listed in Section 1 of Part 2 of the
Guidelines.

(2) Confirmation of Environmental and Social Considerations by JBIC. JBIC does
the following to confirm environmental and social considerations;

(a)  classifies the project into one of the categories listed in Section 4.(2)
     of Part 1 (hereinafter referred to as "screening");

(b)  conducts a review of environmental and social considerations when making a
     decision on funding, to confirm that the requirements are duly satisfied
     (hereinafter referred to as "environmental review"); and

(c)  conducts monitoring and follow-up after the decision has been made on
     funding (hereinafter, such monitoring and follow-up processes will be
     simply referred to as "monitoring").

JBIC conducts screening and environmental reviews of projects for which it
intends to provide funding before it makes decisions on funding.

In light of the Guidelines and taking into account the characteristics of the
project and the particular circumstances of the country and its location, JBIC
confirms in its environmental reviews: 1) whether appropriate and sufficient
consideration is given to environmental and social issues before the
implementation of the project, 2) whether appropriate environmental and social
considerations can be expected after JBIC makes decisions on the funding of the
project in light of such factors as the state of preparation by the project
proponent and host government, their experience, operational capacity, and the
state of securing funds, as well as external factors of instability.

From the standpoint that confirmation of environmental and social considerations
is an important aspect in the risk assessment for the funding, JBIC carries out
environmental reviews in strict


                                        2



conjunction with its financial, economic and technical review of projects.

As well as undertaking efficient pre-funding screening and environmental reviews
through the appropriate use of "screening forms" and "environmental checklists",
amongst other means, JBIC places emphasis on post-funding monitoring.

(3) Information Required for Confirmation of Environmental and Social
Considerations JBIC conducts screening and environmental reviews based
principally on information provided by borrowers and related parties (in the
case of export finance, including exporters). However, JBIC may request
additional information from the borrowers and related parties when necessary.

JBIC recognizes the importance of information received not only from the
borrowers and related parties but also from governments and organizations of
host countries, co-financiers and stakeholders, and utilizes such information in
its screening and environmental reviews.

With respect to projects that are co-financed by other financial institution(s),
JBIC endeavors to exchange information on environmental and social
considerations with the other institution(s) concerned.

For Category A projects (see Section 4.(2) of Part 1), JBIC checks the extent of
stakeholder participation and information disclosure being undertaken for the
project, in accordance with the environmental impact assessment systems of the
host country.

JBIC may, when necessary, conduct surveys of proposed project sites by
dispatching environmental experts to confirm environmental and social
considerations.

JBIC may, when necessary, seek and make use of opinions from outside experts.

(4) Standards for Confirmation of Appropriateness of Environmental and Social
Considerations

JBIC in principle conducts environmental reviews to confirm that projects meet
the requirements for environmental and social considerations stated in the
Guidelines in the following ways: JBIC ascertains whether a project complies
with environmental laws and standards, of the host national and local
governments concerned, as well as whether it conforms to their environmental
policies and plans.

JBIC also uses, as reference points or benchmarks, examples of standards and/or
good practices regarding environmental and social considerations established by
international and regional organizations and developed countries such as Japan.
If JBIC believes the environmental and social considerations of the project
substantially deviate from these standards and good practices, it will consult
with the host governments (including local governments), borrowers and project
proponents to confirm the background and rationale for this deviation.

JBIC takes note of the importance of good governance with regard to projects for
the sake of appropriate environmental and social considerations.

(5) Taking into Account for Funding Decisions

JBIC takes the outcomes of its environmental reviews into account for decisions
on funding. If, as a result of its environmental review, JBIC judges that
appropriate environmental and social considerations are not ensured, it will
encourage the project proponent, through the borrower, to undertake appropriate
environmental and social considerations. If appropriate environmental and social
considerations are not undertaken, there may be cases where funding is not
extended.


                                       3



4. PROCEDURES FOR CONFIRMATION OF ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

(1) Screening

Before starting an environmental review of a project, JBIC classifies the
project into one of the following categories. The subsequent environmental
review will then be conducted in accordance with the procedures for that
category.

JBIC requests the borrowers and related parties to submit the necessary
information promptly so that it may perform the screening process at an early
stage.

During the screening process, JBIC classifies each project in terms of its
potential environmental impact, taking into account such factors as: the sector
and scale of the project, the substance, degree and uncertainty of its potential
environmental impact and the environmental and social context of the proposed
project site and surrounding areas.

JBIC may revise the categorization when necessary, e.g., in cases where
environmental impact worth considering comes to light even after the screening
based on the information provided by the borrowers and related parties is
performed.

(2) Categorization

Category A: A proposed project is classified as Category A if it is likely to
have significant adverse impact on the environment. A project with complicated
impact or unprecedented impact which are difficult to assess is also classified
as Category A. The impact of Category A projects may affect an area broader than
the sites or facilities subject to physical construction. Category A, in
principle, includes projects in sensitive sectors (i.e., sectors that are liable
to cause adverse environmental impact) or with sensitive characteristics (i.e.,
characteristics that are liable to cause adverse environmental impact) and
projects located in or near sensitive areas. An illustrative list of sensitive
sectors, characteristics and areas is given in Section 3 of Part 2.

Category B: A proposed project is classified as Category B if its potential
adverse environmental impact is less adverse than that of Category A projects.
Typically, this is site-specific, few if any are irreversible, and in most cases
normal mitigation measures can be designed more readily. Projects funded by
Engineering Service Loans that are yen loans for survey and design, are
classified as Category B, with the exception of those belonging to Category C.

Category C: A proposed project is classified as Category C if it is likely to
have minimal or no adverse environmental impact. Projects that correspond to one
of the following are, in principle, classified as Category C, with the exception
of projects with sensitive characteristics and projects located in sensitive
areas as indicated in Section 3 of Part 2:

     1) Projects for which the JBIC's share is not above SDR 10 million;

     2) Sectors or projects in which no particular environmental impact would be
     normally expected (e.g., human resources development, support for
     international balance of payments, maintenance of existing facilities,
     acquisition of rights and interests without additional capital investment);
     or

     3) Cases in which there is only minor involvement of the project by the
     borrower or JBIC, such as the export/import or lease of items of machinery
     or equipment that is not connected with a particular project, and where
     there would be little reasonable significance in JBIC's conducting an
     environmental review.


                                       4



Category FI: A proposed project is classified as Category FI if it satisfies all
of the following: JBIC's funding of the project is provided to a financial
intermediary etc.; the selection and assessment of the actual sub-projects is
substantially undertaken by such an institution only after JBIC's approval of
the funding and therefore the sub-projects cannot be specified prior to JBIC's
approval of funding (or assessment of the project); and those sub-projects are
expected to have potential impact on the environment.

(3) Environmental Review for Each Category

After the screening process, JBIC carries out environmental reviews according to
the following procedures for each category.

Category A: Environmental reviews for Category A projects examine the potential
negative and positive environmental impact of projects. JBIC evaluates measures
necessary to prevent, minimize, mitigate or compensate for potential negative
impact, and measures to promote positive impact if any such measures are
available. Borrowers and related parties must submit Environmental Impact
Assessment (EIA) reports (see Section 2 of Part 2) for Category A projects. For
projects that will result in large-scale involuntary resettlement, basic
resettlement plans must be submitted. JBIC undertakes its environmental reviews
based on the EIA and other reports prepared by the project proponents and
submitted through the borrower.

Category B: The scope of environmental reviews for Category B projects may vary
from project to project, but it is narrower than that for Category A projects.
The environmental reviews for Category B are similar to that of category A in
that they examine potential negative and positive environmental impact and
evaluate measures necessary to prevent, minimize, mitigate or compensate for the
potential negative impact, and measures to promote positive impact if any such
measures are available. JBIC undertakes its environmental reviews based on
information provided by borrowers and related parties. Where an EIA procedure
has been conducted, the EIA report may be referred to, but this is not a
mandatory requirement.

Category C: For projects in this category, environmental reviews will not
proceed beyond screening.

Category FI: JBIC checks through the financial intermediary etc. to see whether
appropriate environmental and social considerations as stated in the Guidelines
are ensured for projects in this category.

The corresponding environmental checklists for each sector will be referred to
in conducting the aforementioned reviews.

(4) Monitoring

JBIC in principle confirms through the borrower over a certain period of time,
the results of monitoring the items which have a significant environmental
impact by the project proponents. This is in order to confirm the project
proponents' undertaking of environmental and social considerations for category
A and B projects.

The information necessary for monitoring by JBIC needs to be supplied by the
borrowers and related parties by appropriate means. When necessary, JBIC may
also conduct its own investigations. When third parties point out in concrete
terms that environmental and social considerations are not being fully
undertaken, JBIC forwards such claims to the borrowers and, if necessary,
encourages them to request the project proponents to take appropriate action. In
the project proponents' response


                                       5



to the claim, JBIC confirms that they carry out the investigation of the
specific claim, the examination of countermeasures, and their incorporation into
the project plans through transparent and accountable processes.

Also, when necessary, JBIC may request the cooperation of the borrowers and
related parties in conducting its own investigations to confirm the state of
undertaking of environmental and social considerations.

If JBIC judges that there is a need for improvement in the situation with
respect to environmental and social considerations, it may ask the project
proponent, through the borrower, to take appropriate action in accordance with
the loan agreement. If the response of the project proponent is inappropriate,
JBIC may consider taking its own actions in accordance with the loan agreement,
including the suspension of the disbursement.

5. DISCLOSURE OF INFORMATION REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS BY JBIC

(1) Basic Principles

JBIC welcomes information provided by concerned organizations and stakeholders,
so that it may consider a diverse range of opinions and information in its
environmental reviews and supervision of projects. In order to encourage
concerned organizations and stakeholders to provide information to JBIC at an
early stage and to ensure its accountability and transparency in the
environmental review process, JBIC makes available, important information on
environmental reviews in ways appropriate to the nature of the project, while
the environmental review is in progress. JBIC may also, when necessary, seek the
opinions of concerned organizations and stakeholders.

In addition to the aforementioned principles, if requested by third parties,
JBIC will provide them with information regarding environmental and social
considerations within its capacity to do so.

JBIC respects the confidentiality of the commercial and other matters of the
borrowers and related parties, and observes concurrently the principles of
information disclosure and such confidentiality.

(2) Timing of Disclosure and Content of Disclosed Information

Prior to making decisions on funding and depending on the nature of the project,
JBIC discloses information in principle at the timing and with the contents
listed below. JBIC endeavors to disclose information in a manner that allows
enough time before decisions are made on funding:

     -    Upon completion of the screening of a project, JBIC discloses, as soon
          as possible, the project name, country, location, an outline and
          sector of the project, and its category classification, as well as the
          reasons for that classification; and

     -    For Category A and Category B projects, JBIC publishes the status of
          major documents on environmental and social considerations by the
          borrowers and related parties, such as EIA reports and environmental
          permit certificates, etc. issued by the host government on the JBIC
          website, and promptly makes available the EIA reports etc.

After executing a loan agreement, JBIC provides the results of its environmental
reviews of projects in Categories A, B and FI for public perusal on the JBIC
website.

JBIC pays due consideration to the confidentiality of the commercial and other
matters of the borrowers and related parties, taking into account their
competitive relationships, and encourages


                                       6



them to exclude such confidential information from any documents on
environmental considerations submitted by them that may later be subject to
public disclosure. Any information that is prohibited from public disclosure in
the agreement between JBIC and the borrower may be disclosed only with either
the agreement of the borrowers and related parties or in accordance with legal
requirements.

6. TAKING ENVIRONMENTAL REVIEWS INTO ACCOUNT FOR DECISION-MAKING AND LOAN
AGREEMENTS

JBIC takes the results of environmental reviews into account for its
decision-making on funding. If JBIC considers that a project is likely to have
an adverse impact on the environment due to inappropriate environmental and
social considerations, it will encourage, through the borrower the project
proponent to undertake appropriate environmental and social considerations. If
appropriate environmental and social considerations are not undertaken, JBIC may
decide not to extend funding.

JBIC will make its utmost effort to ensure that the following requirements are
met through loan agreements or their attached documents, when it is considered
necessary to ensure the enforcement of environmental and social considerations
by borrowers and related parties:

     -    The borrower is to report to JBIC on measures and monitoring related
          to environmental and social considerations undertaken by the project
          proponents. If, due to unforeseen circumstances, there is a
          possibility that the requirements for environmental and social
          consideration may not be fulfilled, the borrower is to report this to
          JBIC;

     -    If any problems regarding environmental and social considerations
          arise, the borrower is to make efforts for discussions to be held
          between the project proponents and project stakeholders;

     -    When project proponents and the host governments (including local
          governments) other than the borrower have important roles to play in
          terms of environmental and social considerations, the borrower is to
          endeavor to enter into agreements with these arties as well; and

     -    If it becomes evident that the borrower and the project proponents
          have not met the conditions required by JBIC under the Guidelines, or
          if it becomes apparent that the project will have an adverse impact on
          the environment after funding is extended, due to the borrower's or
          related parties' failure to supply correct information during the
          environmental review process, JBIC may, in accordance with the loan
          agreement, suspend the disbursement or declare all the principal
          outstanding at the time, with interest and any other charges thereon,
          to be payable immediately.

7. ENSURING APPROPRIATE IMPLEMENTATION OF AND COMPLIANCE WITH THE GUIDELINES

JBIC endeavors to ensure appropriate implementation of the policies and
procedures stated in the Guidelines and compliance with the Guidelines. In order
to ensure its compliance with the Guidelines, JBIC accepts objections regarding
its non-compliance with the Guidelines and takes the necessary actions.

8. IMPLEMENTATION AND REVIEW OF THE GUIDELINES

JBIC verifies the status of the implementation of the Guidelines, and, based on
its findings, conducts a comprehensive review of the Guidelines within five (5)
years of their enforcement. Revisions may then be made as needed. When making
revisions, JBIC will seek the opinions of the Japanese Government, the
governments of developing countries, Japanese companies, experts, NGOs etc.,


                                       7



while maintaining transparency in the process.

These Guidelines will come into force from October 1, 2003. The "Environmental
Guidelines for JBIC International Financial Operations" and "JBIC Environmental
Guidelines for ODA Loans" will apply to projects for which loan applications
have essentially been made before the enactment of these Guidelines.

N.B.: If there is any ambiguity in English version and/or any inconsistency with
Japanese version, the Japanese version prevails.


                                       8



PART 2.

1. ENVIRONMENTAL AND SOCIAL CONSIDERATIONS REQUIRED FOR FUNDED PROJECTS

In principle, appropriate environmental and social considerations are
undertaken, according to the nature of the project, based on the following:

(Underlying Principles)

- -    Environmental impact which may be caused by a project must be assessed and
     examined from the earliest planning stage possible. Alternative proposals
     or minimization measures to prevent or reduce adverse impact must be
     examined and incorporated into the project plan:

- -    Such examination must include analysis of environmental costs and benefits
     in as quantitative terms as possible and be conducted in close harmony with
     economic, financial, institutional, social and technical analysis of the
     project;

- -    The findings of the examination of environmental and social considerations
     must include alternative proposals, mitigation measures and be recorded as
     separate documents or as a part of other documents. Environmental Impact
     Assessment (EIA) reports must be produced for projects in which there is a
     reasonable expectation of particularly large adverse environmental impact;
     and

- -    For projects that have particularly large potential adverse impact or are
     highly contentious, a committee of experts may be formed to seek their
     opinions, in order to increase accountability.

(Examination of Measures)

- -    Multiple alternative proposals must be examined to prevent or minimize
     adverse impact and to choose a better project option in terms of
     environmental and social considerations. In examination of measures,
     priority is to be given to the prevention of environmental impact, and when
     this is not possible, minimization and reduction of impact must be
     considered next. Compensation measures must be examined only when impact
     cannot be prevented by any of the aforementioned measures; and

- -    Appropriate follow-up plans and systems, such as monitoring plans and
     environmental management plans, must be prepared; and costs of implementing
     such plans and systems, and financial methods to fund such costs, must be
     determined. Plans for projects with particularly large potential adverse
     impact must be accompanied by detailed environmental management plans.

(Scope of Impact to be Examined)

- -    Environmental impact to be investigated and examined includes factors that
     impact human health and safety as well as the natural environment, such as:
     air, water, soil, waste, accidents, water usage, ecosystems, and biota.
     Social concerns include: involuntary resettlement of the population, the
     indigenous people, cultural heritage, landscape, gender, children's rights
     and communicable diseases such as HIV/AIDS and impact that may lead to
     trans-boundary and global environmental problems; and


                                       9



- -    In addition to the direct and immediate impact of projects, derivative,
     secondary and cumulative impact are also to be examined and investigated to
     a reasonable extent. It is also desirable that the impact which can occur
     at any time during the duration of the project be continuously considered
     throughout the life cycle of the project.

(Compliance with Laws, Standards and Plans)

- -    Projects must comply with laws, ordinances and standards relating to
     environmental and social considerations established by the governments that
     have jurisdiction over the project site (including both national and local
     governments). They are also to conform to environmental and social
     consideration policies and plans of the governments that have jurisdiction
     over the project site; and

- -    Projects must, in principle, be undertaken outside protected areas that are
     specifically designated by laws or ordinances of the government for the
     conservation of nature or cultural heritage (excluding projects whose
     primary objectives are to promote the protection or restoration of such
     designated areas). Projects are also not to impose significant adverse
     impact on designated conservation areas.

(Social Acceptability and Social Impacts)

Project must be adequately coordinated so that they are accepted in a manner
that is socially appropriate to the country and locality in which the project is
planned. For projects with a potentially large environmental impact, sufficient
consultations with stakeholders, such as local residents, must be conducted via
disclosure of information from an early stage where alternative proposals for
the project plans may be examined. The outcome of such consultations must be
incorporated into the contents of the project plan; and

- -    Appropriate consideration must be given to vulnerable social groups, such
     as women, children, the elderly, the poor and ethnic minorities, all of
     whom are susceptible to environmental and social impact and who may have
     little access to the decision-making process within society.

(Involuntary Resettlement)

- -    Involuntary resettlement and loss of means of livelihood are to be avoided
     where feasible, exploring all viable alternatives. When, after such
     examination, it is proved unfeasible, effective measures to minimize impact
     and to compensate for losses must be agreed upon with the people who will
     be affected;

- -    People to be resettled involuntarily and people whose means of livelihood
     will be hindered or lost must be sufficiently compensated and supported by
     the project proponents, etc. in timely manner. The project proponents, etc.
     must make efforts to enable the people affected by the project, to improve
     their standard of living, income opportunities and production levels, or at
     least to restore them to pre-project levels. Measures to achieve this may
     include: providing land and monetary compensation for losses (to cover land
     and property losses), supporting the means for an alternative sustainable
     livelihood, and providing the expenses necessary for relocation and the
     re-establishment of a community at relocation sites; and

- -    Appropriate participation by the people affected and their communities must
     be promoted in planning, implementation and monitoring of involuntary
     resettlement plans and measures against the loss of their means of
     livelihood.


                                       10



(Indigenous Peoples)

- -    When a project may have adverse impact on indigenous peoples, all of their
     rights in relation to land and resources must be respected in accordance
     with the spirit of the relevant international declarations and treaties.
     Efforts must be made to obtain the consent of indigenous peoples after they
     have been fully informed.

(Monitoring)

- -    It is desirable that, after a project begins, the project proponents
     monitor: (i) whether any situations that were unforeseeable before the
     project began have arisen, (ii) the implementation situation and the
     effectiveness of the mitigation measures prepared in advance, and that they
     then take appropriate measures based on the results of such monitoring;

- -    In cases where sufficient monitoring is deemed essential for the
     achievement of appropriate environmental and social considerations, such as
     the projects for which mitigation measures should be implemented while
     monitoring their effectiveness, project proponents must ensure that project
     plans include monitoring plans which are feasible;

- -    It is desirable that project proponents make the results of the monitoring
     process available to project stakeholders; and

- -    When third parties point out, in concrete terms, that environmental and
     social considerations are not being fully undertaken, it is desirable that
     a forum for discussion and examination of countermeasures be established
     based on sufficient information disclosure and include the participation of
     stakeholders in the relevant project. It is also desirable that an
     agreement be reached on procedures to be adopted with a view to resolving
     the problem.

2. EIA REPORTS FOR CATEGORY A PROJECTS

The following conditions are met in principle:

- -    When assessment procedures already exist in host countries, and projects
     are subject to such procedures, borrowers and related parties must
     officially complete those procedures and obtain the approval of the
     government of the host country;

- -    EIA reports (which may be referred to differently in different systems)
     must be written in the official language or a language widely used in the
     country where the project is to be implemented. When explaining projects to
     local residents, written materials must be provided in a language and form
     understandable to them;

- -    EIA reports are required to be made available in the country and to the
     local residents where the project is to be implemented. The EIA reports are
     required to be available at all times for perusal by project stakeholders
     such as local residents and that copying be permitted;

- -    In preparing EIA reports, consultation with stakeholders, such as local
     residents, must take place after sufficient information has been disclosed.
     Records, etc. of such consultations must be prepared;

- -    Consultations with relevant stakeholders, such as local residents, should
     take place if necessary throughout the preparation and implementation
     stages of a project. Having consultations is


                                       11



     highly desirable, especially when the items to be considered in the EIA are
     being selected, and when the draft report is being prepared; and

- -    It is desirable that EIA reports cover the items enumerated in the Appendix
     hereto.

2. APPENDIX

     ILLUSTRATIVE ENVIRONMENTAL IMPACT ASSESSMENT REPORT FOR CATEGORY A PROJECTS
     NB

An EIA's scope and level of detail should be decided in accordance with the
project's potential impacts. The EIA report should include the following items
(not necessarily in the order shown):

- -    Executive Summary: concisely discusses significant findings and recommended
     actions.

- -    Policy, legal and administrative framework: discusses the policy, legal and
     administrative framework within which the EIA report is to be carried out.

- -    Project description: describes the proposed project and its geographic,
     ecological, social and temporal context, including any off-site investments
     that may be required (e.g. dedicated pipelines, access roads, power plants,
     water supply, housing, and raw material and product storage facilities).
     Indicates the need for any resettlement or social development plan.
     Normally includes a map showing the project site and the area affected by
     the project.

- -    Baseline data: assesses the dimensions of the study area and describes
     relevant physical, biological and socio-economic conditions, including all
     changes anticipated before the project commences. Additionally, takes into
     account current and proposed development activities within the project area
     but not directly connected to the project. Data should be relevant to
     decisions about project site, design, operation, or mitigatory measures;
     the section indicates accuracy, reliability and sources of the data.

- -    Environmental Impacts: predicts and assesses the project's likely positive
     and negative impacts, in quantitative terms to the extent possible.
     Identifies mitigation measures and any negative environmental impacts that
     cannot be mitigated. Explores opportunities for environmental enhancement.
     Identifies and estimates the extent and quality of available data,
     essential data gaps and uncertainties associated with predictions, and
     specifies topics that do not require further attention.

- -    Analysis of alternatives: systematically compares feasible alternatives to
     the proposed project site, technology, design and operation including the
     "without project" situation in terms of their potential environmental
     impacts; the feasibility of mitigating these impacts; their capital and
     recurrent costs; their suitability under local conditions; and their
     institutional, training and monitoring requirements. For each of the
     alternatives, quantifies the environmental impacts to the extent possible,
     and attaches economic values where feasible. States the basis for selecting
     the particular project design proposed and offers justification for
     recommended emission levels and approaches to pollution prevention and
     abatement.

- -    Environmental Management Plan (EMP): describes mitigation, monitoring and
     institutional measures to be taken during construction and operation to
     eliminate adverse impacts, offset them, or reduce them to acceptable
     levels.


                                       12



- -    Consultation: Record of consultation meetings, including consultations for
     obtaining the informed views of the affected people, local non-governmental
     organizations (NGOs) and regulatory agencies.

NB This Appendix is based on the World Bank Operational Policy - OP 4.01, Annex
B.


                                       13



3. ILLUSTRATIVE LIST OF SENSITIVE SECTORS, CHARACTERISTICS AND AREAS

1. Sensitive Sectors

Large-scale projects in the following sectors:

     (1) Mining

     (2) Oil and natural gas development

     (3) Oil and gas pipelines

     (4) Iron and steel (projects that include large furnaces)

     (5) Non-ferrous metals smelting and refining

     (6) Petrochemicals (manufacture of raw materials; including complexes)

     (7) Petroleum refining

     (8) Oil, gas and chemical terminals

     (9) Paper and pulp

     (10) Manufacture and transport of toxic or poisonous substances regulated
     by international treaties, etc.

     (11) Thermal power

     (12) Hydropower, dams and reservoirs

     (13) Power transmission and distribution lines involving large-scale
     involuntary resettlement, large-scale logging or submarine electrical
     cables

     (14) Roads, railways and bridges

     (15) Airports

     (16) Ports and harbors

     (17) Sewage and wastewater treatment having sensitive characteristics or
     located in sensitive areas or their vicinity

     (18) Waste management and disposal

     (19) Agriculture involving large-scale land-clearing or irrigation

     (20) Forestry

     (21) Tourism (construction of hotels, etc.)


                                       14



2. Sensitive Characteristics

     (1) Large-scale involuntary resettlement

     (2) Large-scale groundwater pumping

     (3) Large-scale land reclamation, land development and land-clearing

     (4) Large-scale logging

3. Sensitive Areas

Projects in the following areas or their vicinity

     (1)  National parks, nationally-designated protected areas (coastal areas,
          wetlands, areas for ethnic minorities or indigenous peoples and
          cultural heritage, etc. designated by national governments)

     (2)  Areas considered to require careful consideration by the country or
          locality

     Natural Environment

          a) Primary forests or natural forests in tropical areas

          b) Habitats with important ecological value (coral reefs, mangrove
          wetlands and tidal flats, etc.)

          c) Habitats of rare species requiring protection under domestic
          legislation, international treaties, etc.

          d) Areas in danger of large-scale salt accumulation or soil erosion

          e) Areas with a remarkable tendency towards desertification

     Social Environment

          a) Areas with unique archeological, historical or cultural value

          b) Areas inhabited by ethnic minorities, indigenous peoples or nomadic
          peoples with traditional ways of life and other areas with special
          social value.

4. INFORMATION REQUIRED FOR SCREENING PROCESS

The following data shall be used in principle to conduct screening. When
necessary, additional data may be required depending on the nature of the
project and peripheral circumstances, etc.


                                       15



Items to be Listed

1. Permits and Approvals

     -    Need for permits and approvals for Environmental Impact Assessment

     -    Status of acquisition of permits and approvals for EIA

     -    Date of issue of permits and approvals for EIA

     -    Names of organizations issuing permits and approvals for EIA

     -    Status of acquisition of other environmental permits and approvals

2. Project Details

     -    Location of project site

     -    Project Description

     -    Relevant sector

     -    Scale, etc. of project

3. Environmental Impact

     -    Degree of environmental impact

     -    Existence of sensitive areas

     -    Existence of sensitive characteristics

     -    Scale of sensitive characteristics

5. CATEGORIES AND ITEMS IN CHECKLIST

The checklists include the following categories and items related to the
environment. When using these checklists, the appropriate items should be
checked based on the sector and nature of the project.



Category                                 Item
- --------                                 ----
                                      
1. Permits and approvals, explanations   -    EIA and environmental permits

                                         -    Explanations to the Public

2. Anti-pollution measures               -    Air quality

                                         -    Water quality



                                       16



                                      
                                         -    Waste

                                         -    Soil contamination

                                         -    Noise and vibration

                                         -    Subsidence

                                         -    Odor

                                         -    Sediment

3. Natural environment                   -    Protected areas

                                         -    Ecosystem

                                         -    Hydrology

                                         -    Topography and geology

                                         -    Management of abandoned sites

4. Social environment                    -    Resettlement

                                         -    Living and livelihood

                                         -    Heritage

                                         -    Landscape

                                         -    Ethnic minorities and indigenous
                                              peoples

5. Other                                 -    Impact during construction

                                         -    Accident prevention measures

                                         -    Monitoring



6. ITEMS REQUIRING MONITORING

Items requiring monitoring shall be decided according to the sector and nature
of the project, with reference to the following list of items.

Items

1.   Permits and approvals, explanations

- -    Response to matters indicated by authorities

2.   Anti-pollution measures

- -    Air quality: SO(2), No(2), CO, O(2), soot and dust, suspended particulate
                   matter, coarse particulate, etc.

- -    Water quality: pH, SS (suspended solids), BOD (biochemical oxygen demand)


                                       17



                       / COD (chemical oxygen demand), DO (dissolved oxygen),
                       total nitrogen, total phosphorus, heavy metals,
                       hydrocarbons, phenols, cyanogen compounds, mineral oils,
                       water temperature, etc.

- -    Waste

- -    Noise and vibration

- -    Odors

3. Natural environment

- -    Ecosystems: Impact on valuable species, countermeasures, etc

4. Social environment

- -    Resettlement

- -    Lifestyle and livelihood

NB: For air and water quality, specify whether you are monitoring emission
levels or environmental levels. Also, it should be noted that the items which
require monitoring will differ depending on whether the impact in question will
occur during construction or during the operation of the project.


                                       18



                                                                         ANNEX F

_____________, 2005

Messrs.
SOCIEDAD MINERA CERRO VERDE S.A.A.
ATN.: (BORROWER'S LEGAL REPRESENTATIVE)
(BORROWER'S ADDRESS)
Peru.

                                   "AFFIDAVIT"

Dear Sirs,

We hereby represent that _________________, a Bank incorporated under the laws
of __________, is acting in its capacity of Agent in a loan facility that has
been made available to SOCIEDAD MINERA CERRO VERDE S.A.A., with the following
characteristics:

                                
LENDER:
LENDER'S COUNTRY OR ORIGIN:
BORROWER:                          SOCIEDAD MINERA CERRO VERDE S.A.A.
AGENT:
PURPOSE:
FACILITY TYPE:
AVAILABILITY:
ADVANCE TERM:
AMOUNT:
INTEREST TYPE / RATE:
INTEREST PERIOD:
SECURITY:
INSTALLMENTS / PAYMENT SCHEDULE:
FEES:



To our knowledge, this transaction is not hiding a loan between economically
related parties.

This certification is being issued by an authorized officer of Sumitomo Mitsui
Banking Corporation and upon request by Sociedad Minera Cerro Verde S.A.A.

Sincerely yours,

Sumitomo Mitsui Banking Corporation


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       F-1



                                                                         ANNEX G

                       DISBURSEMENT AND PAYMENT PROCEDURES

1. Disbursement Procedures

Not later than 2:00 p.m., New York time, on each Disbursement Date, the JBIC
Agent shall:

     i.   transfer to the Onshore Dollars Account the amounts of the
          disbursement of the Tranche A Loan on deposit in the JBIC Agent Tokyo
          Disbursement Account and the disbursement of the Tranche B Loans on
          deposit in the JBIC Agent New York Disbursement Account;

     ii.  issue to its corresponding bank for Dollar payments an MT 202 SWIFT
          message with instructions to transfer the disbursements referred to in
          the immediately preceding sub-clause (i) to the Onshore Dollars
          Account with a value date that is the Disbursement Date; and

     iii. issue a payment order in the form of an MT 103 SWIFT message to the
          Onshore Collateral Agent.

2. Payment Procedures

(1) Not later than 11:00 a.m., New York time, on the date that is two (2)
Business Days prior to each Payment Date the Borrower shall arrange for, and
confirm to the JBIC Agent that:

     i.   it has cash available in the Proceeds Account at least equal to the
          amount required to be paid on such Payment Date (the "PAYMENT
          AMOUNT"); and

     ii.  it has instructed the Offshore Collateral Agent to (A) issue an MT 202
          SWIFT message with irrevocable instructions to transfer the Payment
          Amount to the JBIC Agent New York Repayment Account with a value date
          that is the Payment Date and (B) issue to the JBIC Agent an MT 103
          SWIFT message advising the JBIC Agent of the transfer.

(2) Not later than 11:00 a.m., Tokyo time, on each Payment Date, the JBIC Agent
shall:


                                       G-1



     i.   issue to its corresponding bank in New York an MT 202 SWIFT message
          with instructions to transfer funds to the JBIC New York Repayment
          Account and to the accounts of the Tranche B Funding Source Banks as
          designated by them, in each case with a value date that is the Payment
          Date; and

     ii.  notify by telephone each of JBIC and the Tranche B Funding Source
          Banks of the transfer to each of its respective portion of the Payment
          Amount.


                                       G-2



                                                                         ANNEX H

                          FORM OF JBIC PROMISSORY NOTE

                              PAGARE NO NEGOCIABLE

Place and date of issuance: Lima Peru, __
Amount US$__

FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A. (the
"Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange and
duly incorporated under the laws of the Republic of Peru, registered with the
Public Registry of Companies of Lima, under File No. __, and whose principal
office is at __, Republic of Peru, by this non negotiable (no negociable)
promissory note ("pagare") (the "Promissory Note") except as permitted in
Section 12.13 (b) of the MPA, unconditionally promises to pay to the order of __
(the "Holder"), against presentment of this note, the sum of __ dollars of the
United States of America (US$__) (the "Principal Amount"), payable on the dates
set forth in the following payment schedule (each date, a "Payment Date") and in
the amounts indicated next to the applicable Payment Date, provided that the
principal amount to be paid to the Holder on a Payment Date shall not exceed the
principal amount hereof outstanding immediately prior to such Payment Date.



                             PRINCIPAL AMOUNT
       PAYMENT DATE            TO BE REPAID
- --------------------------   ----------------
                          
    First Payment Date              __

6th month after the First           __
   Payment Date
12th month after the First          __
   Payment Date
18th month after the First          __
   Payment Date
24th month after the First          __
   Payment Date
30th month after the First          __
   Payment Date
36th month after the First          __
   Payment Date
42nd month after the First          __
   Payment Date
48th month after the First          __
   Payment Date
54th month after the First          __
   Payment Date
60th month after the First          __
   Payment Date
66th month after the First          __
   Payment Date
72nd month after the First          __
   Payment Date
78th month after the First          __
   Payment Date
84th month after the First          __
   Payment Date
90th month after the First          __
   Payment Date


The Borrower also promises to pay to the Holder interest on the outstanding and
unpaid principal amount of this Promissory Note, from the date hereof until the
last Payment Date, at an annual rate of the Base Rate plus the Applicable Margin
(the "Interest Rate"), such interest to accrue


                                       H-1



semiannually on the outstanding principal amount during the Interest Period.
Interest shall be payable in arrears on each Interest Payment Date. All
computations of interest shall be made on the basis of a year of three hundred
and sixty (360) days and the actual number of days elapsed (fractional sums of
less than one cent (US$0.01) being disregarded).

If any payment to be made hereunder is due on a day which is not a Business Day,
such payment shall be made on the immediately succeeding Business Day.

     If the principal amount of this Promissory Note is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
principal amount remaining unpaid shall carry default interest from the due date
thereof, up to the date of payment of such principal amount to the Holder (after
as well as before judgment) at an annual rate equal to the Default Rate.

     The Borrower may prepay on any Payment Date after the Completion Release
Date and upon not less than 60 days prior written irrevocable notice, all or
part of the outstanding principal amount hereof, so long as, in connection with
a voluntary partial prepayment, the aggregate amount of any such voluntary
partial prepayment equals at least __ (3) dollars of the United States of
America (US$__).

     [No premium or penalty shall be payable in connection with a prepayment of
all or part of the outstanding principal amount hereof.][Borrower shall pay to
the Holder a prepayment premium equal to one-half of one per cent (0.5%) of the
amount of principal to be prepaid if Borrower elects to voluntarily prepay all
or part of the outstanding principal amount hereof. No premium or penalty shall
be payable in connection with other prepayments.](4)

     Each prepayment of the outstanding principal amount hereof shall (unless
such prepayment repays in full such outstanding principal amount) be applied to
prepay ratably each outstanding installment of principal hereof remaining to be
paid as of the date of such prepayment.

     For purposes of this Promissory Note, the following terms shall have the
following meanings:

     "Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.

     "Applicable Margin" means [0.875% per annum][1.35% per annum] (5).

- ----------
(3)  Insert pro rata amount of the minimum prepayment amount applicable to the
     Advance(s) evidenced by the Promissory Note.

(4)  Include prepayment premium language for Tranche A loans. Otherwise, include
     no prepayment premium language.

(5)  Include as appropriate for loans of Tranche A or Tranche B. The pagares
     must be replaced on the Payment Date immediately following the Completion
     Release Date.


                                       H-2



     "Base Rate" means, with respect to any Interest Period and for purposed of
the Default Rate, (i) the rate per annum (on the basis of a 360-day year) quoted
on the Telerate Screen Page 3750 for the purpose of displaying London interbank
offered rates of major banks for deposits in dollars as the "British Bankers
Association Interest Settlement Rate" in dollars (hereinafter referred to as
"BBA LIBOR"), or if such page ceases to display, such other page on Telerate or
on such other service as may be selected by the Holder as suitable for
determining BBA LIBOR, for a period of six (6) months, at approximately 11:00
a.m., London time, on the relevant Calculation Date, or (ii) if no rate is
quoted on such pages on such Calculation Date, the average (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent (1/16%)) of the rates
per annum for a period of six (6) months at which deposits in dollars are
offered to at least two Reference Banks, as set out below, in the London
interbank market, in each case, at approximately 11:00 a.m., London time, on
such Calculation Date. "Reference Banks" shall mean two or more banks selected
by the Holder. In the event that such rate is not available at such time for any
reason, then "Floating Rate" for such Interest Period or for purposed of the
Default Rate shall be determined by the Holder.

     "Business Day" means a day on which banks are generally open for business
in London, England, New York, New York, United States, Tokyo, Japan, Frankfurt
am Main, Germany and Lima, Peru.

     "Calculation Date" means (i) with respect to any Interest Period, the day
which is two (2) LIBOR Business Days prior to the commencement of such Interest
Period; and (ii) with respect to the Default Rate, the day which is two (2)
LIBOR Business Days prior to (a) the day on which the unpaid amount becomes due
and payable (for the period from and including such due date up to and excluding
the immediately succeeding Interest Payment Date (in the case where such period
includes the date of actual receipt of the payment by the Holder, up to and
excluding such date)), and (b) to the extent such overdue amount is not paid
during the period described in Clause (a) above each succeeding Interest Payment
Date (for the subsequent period from and including such Interest Payment Date up
to and excluding the immediately succeeding Interest Payment Date (in the case
where such period includes the date of actual receipt of the payment by the
Holder, up to and excluding such date)).

     "Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.

     "Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.

     "Default Rate" means the applicable Interest Rate (including the Applicable
Margin) plus 2% per annum.

     "First Payment Date" means the earlier of (i) the March 20 or the September
20 next occurring after the Commercial Production Start-up Date, and (ii) March
20, 2008.

     "Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations


                                       H-3



thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.

     "Governmental Authority" means any national, state, county, city, town,
village, municipal or other local governmental department, commission, board,
bureau, agency, authority or instrumentality of any nation that affects or may
affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.

     "Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.

     "Interest Period" means any of the following periods:

          (i) on or prior to the First Payment Date, each period commencing on
     an Interest Payment Date (or with respect to the first Interest Period on
     the date hereof) and ending on the day immediately preceding the next
     succeeding Interest Payment Date (including the first day and the last day
     of such period); and

          (ii) thereafter, each period commencing on a Payment Date and ending
     on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

     "LIBOR Business Day" means a day on which dealings in deposits in dollars
are carried on in the London interbank Euro-currency market;

     "Loan Agreement" means the Loan Agreement dated as of September 30th, 2005
between the Borrower and KfW.

     "MPA" means the Master Participation Agreement dated as of September 30th,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
and Mizuho Corporate Bank, Ltd.

     "MSA" means the Master Security Agreement dated as of September 30th, 2005
entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.

     "Peruvian Income Tax Act" means the Legislative Decree 774 of December 31,
1993, as amended.

     "Sulfide Project" means the Borrower's development of a primary sulfide
portion of the ore body beneath the oxide portion of the ore body currently in
production at its Cerro Verde copper mine, located in the Districts of Uchumayo
and Yarabamba, Province of Arequipa, Peru.


                                       H-4



     "Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.

     All payments by the Borrower of principal and interest hereunder shall be
made in dollars of the United States of America, not later than 11:00 a.m., New
York City time, on the due date for payment thereof (any payment received after
such time shall be deemed to have been made on the immediately succeeding
Business Day), by transfer of immediately available funds to the account of
Sumitomo Mitsui Banking Corporation in its capacity as the Holder's agent at
[ __(6)].

     Any and all payments made by or on account of the Borrower in respect of
any obligation hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any and all present or future Taxes
(excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority of the Republic of Peru,
unless such deduction or withholding is required by an applicable Government
Rule, in which case the following paragraph shall apply.

     If the Borrower shall be required by law to deduct any Indemnified Taxes
now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.

     The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.

     The Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of Downtown Lima (Lima-Cercado) and of any Federal or State court
located in the Borough of

- ----------
(6)  Insert payment instructions, including place of payment.


                                       H-5



Manhattan, The City of New York, as the Holder hereof may elect for any
proceeding arising out of or relating to this Promissory Note. The Borrower
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.

     The Parties further agree that, without prejudice to the law of the State
of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.

     This Promissory Note is issued in Spanish and English. The Parties agree
that the applicable version of this Promissory Note will be (i) the Spanish
version in case the jurisdiction of the Courts of Downtown Lima (Lima-Cercado)
is the jurisdiction elected by the Holder, or be (ii) the English version in
case the jurisdiction of any Federal or State court located in the Borough of
Manhattan, The City of New York is the jurisdiction elected by the Holder. In
case of discrepancies between the Spanish and English versions (i) the Spanish
version shall prevail when the Courts of Downtown Lima (Lima-Cercado) or other
Spanish speaking jurisdiction is the jurisdiction elected by the Holder, and
(ii) the English version shall prevail when the Federal or State court located
in the Borough of Manhattan, The City of New York or any other non-Spanish
speaking jurisdiction is the jurisdiction elected by the Holder.

Lima, __

By: Sociedad Minera Cerro Verde, S.A.A.

Taxpayer Registry No.: 20170072465

Name of authorized officer: __

Identification Card No __

Power register in Entry No. __ of the Public Registry


                                       H-6



                                                                         ANNEX I

                            Environmental Disclosure

         The Borrower excludes from this representation all construction
      activities and operations that are not conducted by, or that are not
     under the control of, the Borrower, other than construction activities
      that are being performed by third parties who are acting pursuant to
            construction contractual arrangements with the Borrower.


                                       I-1



                                    Exhibit B

                               KfW Loan Agreement



                                                                  EXECUTION COPY

================================================================================

                               KFW LOAN AGREEMENT

                                     between

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                   as Borrower

                                       and

                                      KfW,
                                    as Lender

                         Dated as of September 30, 2005

                                  US$22,500,000

================================================================================



                                TABLE OF CONTENTS

     This table of contents is not part of the Agreement to which it is
attached, but is inserted for convenience only.



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I DEFINITIONS....................................................     1
   1.01 Definitions......................................................     1
   1.02 Other Definitions; Interpretation................................     3
   1.03 Incorporation by Reference.......................................     3
   1.04 Types of Loans...................................................     4

ARTICLE II THE LOANS.....................................................     4
   2.01 Loans............................................................     4
   2.02 Manner of Borrowing..............................................     4
   2.03 Certain Notices..................................................     5
   2.04 Conversions into Fixed Rate Loans................................     5
   2.05 Reduction in Commitment..........................................     5
   2.06 Availability Period..............................................     5

ARTICLE III PRINCIPAL, INTEREST AND PROMISSORY NOTES.....................     5
   3.01 Principal........................................................     5
   3.02 Interest.........................................................     5
   3.03 Post-Default Interest............................................     6
   3.04 Promissory Notes.................................................     6
   3.05 Selection of Fixed Rates.........................................     7
   3.06 Consolidation of Applicable Base Rate for Fixed Rate Loans.......     7

ARTICLE IV COMMISSIONS...................................................     7
   4.01 Commitment Commission............................................     7
   4.02 Loan Management Commission.......................................     8
   4.03 Facility Fee.....................................................     8

ARTICLE V THE HERMES GUARANTEE...........................................     8
   5.01 The HERMES Guarantee.............................................     8
   5.02 Information......................................................     8
   5.03 KfW's Right to Demand Information and Give Approval Regarding
           Export Contracts..............................................     8

ARTICLE VI PREPAYMENT....................................................     9
   6.01 Voluntary Prepayments............................................     9
   6.02 Pro Rata Prepayment..............................................     9
   6.03 Prepayment Compensation for Fixed Rate Loans.....................     9
   6.04 Mandatory Prepayments............................................    10

ARTICLE VII PAYMENTS.....................................................    11
   7.01 Payments.........................................................    11


                               KfW Loan Agreement



                                      -ii-


                                                                         
   7.02 Non-Business Days................................................    11
   7.03 Computations.....................................................    11

ARTICLE VIII CERTAIN INDEMNITIES.........................................    11
   8.01 Increased Cost of Loans..........................................    11
   8.02 Alternative Interest Rate........................................    12
   8.03 Mitigation.......................................................    13

ARTICLE IX CONDITIONS OF LENDING.........................................    13
   9.01 Initial Loan.....................................................    13
   9.02 Additional Conditions............................................    14

ARTICLE X COVENANTS.......................................................   14

ARTICLE XI REPRESENTATIONS AND WARRANTIES................................    14

ARTICLE XII EVENTS OF DEFAULT; REMEDIES..................................    14
   12.01 Events of Default...............................................    14
   12.02 Remedies........................................................    15
   12.03 Suspension, Cancellation or Termination of Commitment...........    15

ARTICLE XIII MISCELLANEOUS...............................................    15
   13.01 No Waiver.......................................................    15
   13.02 No Immunity.....................................................    15
   13.03 Jurisdiction and Service of Process.............................    15
   13.04 GOVERNING LAW...................................................    15
   13.05 Assignments and Participations; Information.....................    16
   13.06 Amendments, Etc.................................................    16
   13.07 Counterparts....................................................    16
   13.08 Judgment Currency...............................................    17
   13.09 Successors and Assigns..........................................    17
   13.10 Stamp Taxes.....................................................    17
   13.11 Survival........................................................    17
   13.12 Severability....................................................    17
   13.13 WAIVER OF JURY TRIAL............................................    17
   13.14 Notices.........................................................    18
   13.15 English Language................................................    18
   13.16 No Restriction..................................................    18



EXHIBIT A - Amortization Schedule

EXHIBIT B - Form of Promissory Note

EXHIBIT C - Form of KfW Loan Agreement Drawdown Certificate

                               KfW Loan Agreement



                               KfW LOAN AGREEMENT

     KfW LOAN AGREEMENT dated as of September 30, 2005 (this "Agreement")
between SOCIEDAD MINERA CERRO VERDE S.A.A., a sociedad anonima abierta organized
under the laws of Peru (the "Borrower"), and KfW, a corporation under the public
law of the Federal Republic of Germany ("KfW").

     KfW is majority-owned by the German government and in accordance with its
Bylaws and institutional objectives, KfW has agreed to grant a credit facility
to the Borrower for purposes of developing and promoting mining activities in
Peru.

     For purposes of financing in part the development by the Borrower of the
Sulfide Project (referred to in the Master Participation Agreement referred to
below), the Borrower is entering into various loan and credit agreements,
including this Agreement, setting out the terms upon which financing is to be
provided for such development. In conjunction therewith, the Borrower, KfW,
JBIC, the Lead JBIC Arrangers, the Commercial Banks and the Administrative Agent
are entering into a master participation agreement (the "Master Participation
Agreement"), containing certain representations, covenants, undertakings and
security for the common benefit of the Senior Facility Lenders providing the
Senior Facility Loans (as defined in the Master Participation Agreement). Also
in connection therewith, the Parent Companies shall enter into a transfer
restrictions agreement (the Transfer Restrictions Agreement referred to in the
Master Participation Agreement), for the common benefit of such Senior Facility
Lenders, and the Parent Companies shall enter into a Completion Guarantee (the
Completion Guarantee referred to in the Master Participation Agreement)
guaranteeing the payment of the Senior Loan Obligations until Completion and
containing undertakings regarding Completion of the Sulfide Project. Based on
the foregoing, KfW is prepared, on the terms and subject to the conditions set
forth herein and in the other Financing Documents, to make Loans to the Borrower
that constitute Loans in an aggregate principal amount up to US$22,500,000 for
the purchase of equipment and services delivered by the Exporter under the
Export Contracts in connection with the development of the Sulfide Project.

     Accordingly, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

          1.01 Definitions. Terms defined in this Agreement shall have their
respective defined meanings as provided herein. Capitalized terms used herein
(including the preamble and recital of this Agreement) and not otherwise defined
herein shall have the meanings assigned to such terms in the Master
Participation Agreement (including Schedule Z thereto). As used in this
Agreement, the following terms shall have the following respective meanings:

     "Applicable Base Rate" shall mean:

          (a) for each Floating Rate Loan during each Interest Period or Default
     Interest Period therefor, the interest rate per annum for Dollar deposits
     for a period equal to (or, if there is no equal, then most comparable to)
     such Interest Period or Default Interest Period


                               KfW Loan Agreement



                                      -2-


     which appears on Reuters Screen LIBOR01 Page (or such other page as may
     replace that page on that service for the purpose of displaying the British
     Bankers Association Interest Settlement Rate) at or about 11:00 a.m. London
     time on the date two Eurodollar Business Days prior to the first day of
     such Interest Period or Default Interest Period; provided that, if no such
     rate appears on Reuters Screen LIBOR01 Page (or such other page as may
     replace that page on that service for the purpose of displaying the British
     Bankers Association Interest Settlement Rate) for any relevant Interest
     Period or Default Interest Period, the Applicable Base Rate shall mean for
     each Loan during such Interest Period or Default Interest Period the rate
     per annum determined by KfW which appears on the page designated Page 3750
     on the Moneyline Telerate Inc. at or about 11:00 a.m. London time on the
     date two Eurodollar Business Days prior to the first day of such Interest
     Period or Default Interest Period; and provided further that if no such
     rates so appear on the page designated Page 3750 on the Moneyline Telerate
     Inc. for any relevant period, the relevant rate of interest shall be
     determined in accordance with Section 8.03 hereof.

          (b) for each Fixed Rate Loan during each Fixed Rate Period therefor,
     the rate per annum equal to the funding costs of KfW in Dollars of a KfW
     Loan for maturities matching as closely as possible the maturity of the
     requested KfW Loan.

     "Default Interest Period" shall mean each successive period (not in excess
of six months) while any amount payable by the Borrower hereunder is in default,
as KfW shall choose in its sole discretion, the first such period to commence as
of the date on which such amount in default becomes due and each succeeding such
period to commence immediately upon the expiry of the immediately preceding such
period.

     "Default Margin" shall mean a rate per annum equal to 2%.

     "Drawdown Certificate" shall have the meaning given to that term in Section
9.02(b) hereof.

     "Export Contracts" shall mean (i) the agreement between Fluor Daniel
Sucursal Del Peru ("Fluor") and Exporter, dated March 15, 2005, for the purchase
of 4 High Pressure Grinding Rolls in a total amount of US$20,092,452.57 and (ii)
the agreement between Fluor and Exporter, dated February 18, 2005, for the
purchase of 4 ball mills in a total amount of US$10,620,502.51, each in
connection with the Sulfide Project.

     "Exporter" shall mean Polysius AG, an entity domiciled in Germany that has
entered into certain contracts for the supply of goods and/or the rendering of
services in connection with the Sulfide Project.

     "Facility Fee" shall have the meaning assigned to such term in Section 4.03
hereof.

     "Fixed Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (b) in the definition of
"Applicable Base Rate" in this Section 1.01.

                               KfW Loan Agreement



                                      -3-


     "Fixed Rate Period" shall mean, for each Fixed Rate Loan, the period from
the date such Loan is made or converted from a Floating Rate Loan into a Fixed
Rate Loan until the maturity of the Loan.

     "Floating Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (a) in the definition of
"Applicable Base Rate" in this Section 1.01.

     "Frankfurt Business Day" shall mean any day on which banks are generally
open for business in Frankfurt Germany.

     "German Supply Portion" shall mean those items of equipment and services of
German origin which have been provided by the Exporters pursuant to the Export
Contracts.

     "Germany" shall mean the Federal Republic of Germany.

     "Head Office" shall mean the principal office of KfW in Germany, presently
located at PalmengartenstraBe 5-9, D-60325 Frankfurt am Main, Germany.

     "HERMES" shall mean Euler Hermes Kreditversicherungs-AG acting on behalf of
the government of the Federal Republic of Germany.

     "HERMES Guarantee" shall mean the insurance coverage to be provided by
HERMES in favor of KfW in respect of the Borrower's obligations under this
Agreement, which shall be in form and substance satisfactory to KfW.

     "KfW Loans" or "Loans" shall mean the loans provided for in Section 2.01
hereof, which may be Floating Rate Loans and/or Fixed Rate Loans.

     "Margin" shall mean 0.35% per annum.

     "Master Participation Agreement" shall have the meaning assigned to such
term in the recitals of this Agreement.

     "Reuters Screen LIBOR01 Page" shall mean the display page so designated on
the Reuter Monitor Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying London interbank offered
rates for Dollar deposits).

     "Type" shall have the meaning given to that term in Section 1.04 hereof.

     "U.S." shall mean the United States of America.

          1.02 Other Definitions; Interpretation. This Agreement shall be
interpreted in accordance with the rules of interpretation set forth in Section
1.02 of the Master Participation Agreement, which are incorporated by reference
herein as if fully set forth herein.

          1.03 Incorporation by Reference. This Agreement and the Master
Participation Agreement shall be viewed as, and shall constitute, one agreement
governing the terms and

                               KfW Loan Agreement



                                      -4-


conditions of the Loans, provided that the exercise of enforcement remedies
shall be made solely pursuant to and in accordance with the Master Participation
Agreement and the Master Security Agreement. In the event of conflict between
this Agreement and the Master Participation Agreement or the Master Security
Agreement, the Master Participation Agreement or the Master Security Agreement,
as the case may be, shall prevail.

          1.04 Types of Loans. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to whether such Loan is a Floating Rate Loan or a Fixed
Rate Loan, each of which constitutes a Type.

                                   ARTICLE II

                                    THE LOANS

          2.01 Loans. KfW agrees, upon the terms and conditions of this
Agreement and the Master Participation Agreement, to make Loans to the Borrower
from time to time in such aggregate principal amount not exceeding its Aggregate
Committed Amount, and on such Business Days during the period from the date
hereof to but excluding the Availability Period End Date as the Borrower shall
request pursuant to Section 2.02 hereof. KfW's Aggregate Committed Amount shall
be utilized for the following purposes: (i) an aggregate principal amount not to
exceed approximately US$20,670,300 to finance or reimburse the Borrower for
expenses incurred in connection with up to 85% of the German Supply Portion and
(ii) an aggregate amount not to exceed approximately US$1,829,700 to finance or
reimburse the Borrower for expenses incurred in connection with up to 100% of
the Facility Fee, collectively not to exceed, in any event, US$22,500,000 in the
aggregate.

     The Loans may be borrowed as Fixed Rate Loans or as Floating Rate Loans.
Floating Rate Loans may be converted into Fixed Rate Loans as provided in
Section 2.04 hereof.

     The Loans shall be advanced from time to time, but in no event more
frequently than once per calendar month, in accordance with the terms of this
Agreement and the Master Participation Agreement. Any amounts borrowed and paid
or prepaid pursuant to the terms herein may not be reborrowed by the Borrower.

     The Borrower shall not be relieved of its obligations under this Agreement
to pay all amounts due and payable on the relevant due date by reason of the KfW
Loans being insufficient to finance up to 100% of the Facility Fee under this
Agreement.

          2.02 Manner of Borrowing. The Borrower shall give KfW not less than
fifteen (15) Business Days' prior notice (which notice shall be copied to the
Trustee and the Administrative Agent and shall be irrevocable and effective upon
receipt) specifying the date and amount of each borrowing hereunder, such notice
to be substantially in the form of Exhibit C and specifying whether the Borrower
requests a Floating Rate Loan or a Fixed Rate Loan. Except as to the borrowing
which utilizes the unborrowed portion of the Commitment in full, each borrowing
of Loans shall be in a minimum amount of US$500,000. No more than one borrowing
may be requested in any calendar month. The proceeds of each Loan shall be made
available directly to the Borrower by KfW in Dollars, on the respective
borrowing date, by credit to the Onshore Dollars Account, thus reimbursing the
Borrower for payments already made

                               KfW Loan Agreement



                                      -5-


under the respective Export Contract, provided that the conditions precedent set
forth in Section 9.01 have been met.

          2.03 Certain Notices. The Borrower shall notify KfW in writing (which
notice shall be irrevocable and effective upon receipt), at least five (5)
Frankfurt Business Days prior to the end of an Interest Period for any Floating
Rate Loan, if the Borrower wishes to convert such Loan into a Fixed Rate Loan
pursuant to Section 2.04 hereof.

          2.04 Conversions into Fixed Rate Loans. The Borrower shall have the
right to convert Floating Rate Loans into Fixed Rate Loans; provided that (a)
the Borrower shall give KfW notice of each such conversion pursuant to Section
2.03 hereof; (b) each such conversion shall be in a minimum amount of
US$500,000, provided, however, that the Borrower may convert any Floating Rate
Loans outstanding as of the Availability Period End Date in an amount less than
US$500,000; and (c) a Floating Rate Loan may be so converted only on the last
day of an Interest Period for such Loan. Upon conversion of Floating Rate Loans
to Fixed Rate Loans all subsequent disbursements shall be made as Fixed Rate
Loans. For the avoidance of doubt, once the Borrower shall have converted
Floating Rate Loans to Fixed Rate Loans, the Borrower shall not be permitted to
revert any such Loans back to Floating Rate Loans.

          2.05 Reduction in Commitment. The Borrower shall have the right to
terminate or reduce the aggregate unused amount of the Commitment subject to and
in accordance with Section 2.03 of the Master Participation Agreement.

          2.06 Availability Period. The facility will be available from the date
on which the conditions precedent set forth in Section 5.01 of the Master
Participation Agreement are fulfilled through the Availability Period End Date.

                                   ARTICLE III

                    PRINCIPAL, INTEREST AND PROMISSORY NOTES

          3.01 Principal. The Borrower agrees to repay the principal amount of
each Loan in 16 consecutive semi-annual installments on each Payment Date,
commencing on the first Payment Date in accordance with the Amortization
Schedule set forth in Exhibit A; provided, however, that the amount of the final
payment of principal of the Loans shall in any event be equal to the remaining
unpaid principal amount of the Loans.

          3.02 Interest. The Borrower agrees to pay KfW interest on the
Outstanding Base Amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan shall be paid in full, at the
following rates per annum:

          (a) during such periods as such Loan is a Floating Rate Loan, for each
     Interest Period relating thereto, the Applicable Base Rate for such
     Floating Rate Loan for such Interest Period plus the applicable Margin
     plus, upon the occurrence and during the Continuance of any MPA Event of
     Default under Section 9.01 of the Master Participation Agreement, the
     Default Margin; and

          (b) during such periods as such Loan is a Fixed Rate Loan, for each
     Fixed Rate Period relating thereto, the Applicable Base Rate for such Fixed
     Rate Loan for such

                               KfW Loan Agreement



                                      -6-


     Fixed Rate Period plus the applicable Margin plus, upon the occurrence and
     during the Continuance of any MPA Event of Default under Section 9.01 of
     the Master Participation Agreement, the Default Margin.

Interest shall accrue (i) in the case of a Fixed Rate Loan, from and including
the date of such Loan in case of the first interest payment with respect to any
Advance or from and including the Interest Payment Date to which interest has
been paid in case of the second and any subsequent interest payments with
respect to each Advance to but excluding the next succeeding Interest Payment
Date or, in the case of payment pursuant to clause (B) below, to but excluding
the date of such payment, and (ii) in the case of a Floating Rate Loan, from and
including the first day of each Interest Period for such Loan to but excluding
the last day of such Interest Period or, in the case of payment pursuant to
clause (B) or (C) below, to but excluding the date of such payment. Accrued
interest on each Loan shall be payable (A) on each Interest Payment Date; (B)
upon the payment or prepayment thereof (on the principal amount so paid or
prepaid); and (C) in the case of a Floating Rate Loan, upon the conversion of
such Loan to a Fixed Rate Loan (on the principal amount so converted). Each
Interest Period for a Floating Rate Loan shall (y) comply with the definition of
the term "Interest Period" and (z) except for the first Interest Period for a
Floating Rate Loan, will have a duration of six months.

          3.03 Post-Default Interest. If any installment of principal of any
Loan or any other amount (including interest on a Loan) payable by the Borrower
hereunder is not paid in full when due (whether at the stated due date, by
acceleration or otherwise), the Borrower hereby agrees to pay from time to time
upon KfW's demand interest on the amount past due and unpaid for such period of
time within each related Default Interest Period during which such amount shall
be due and unpaid, at a rate per annum equal to the sum of (a) the Margin plus
(b) the Default Margin plus (c) (i) in the case of Fixed Rate Loan, during a
Fixed Rate Period therefor, the Applicable Base Rate therefor, and (ii) in all
other cases, the Applicable Base Rate for Floating Rate Loans for such Default
Interest Period.

          3.04 Promissory Notes.

     (a) As additional evidence of the Borrower's obligation to pay the
principal of the Loans as provided in Section 3.01 hereof, the Borrower shall
execute and deliver to the Trustee on behalf of KfW Promissory Notes issued by
the Borrower, in substantially the form set forth in Exhibit B hereto, with a
dual column translation into Spanish to be included therein, in accordance with
Section 2.08 of the Master Participation Agreement.

     (b) The execution and delivery by the Borrower of the Promissory Notes
shall not affect in any way whatsoever the rights or obligations of the Borrower
under this Agreement, and the rights and claims of KfW under the Promissory
Notes held by it shall not replace or supersede the rights and claims of KfW
hereunder, provided that payment of any part of the principal of any such
Promissory Note in accordance with the terms of this Agreement shall, to the
extent that such payment if made hereunder would discharge the Borrower's
obligations hereunder in respect of the payment of the principal of the Loan
evidenced by such Promissory Note, discharge such obligation pro tanto and the
payment of any principal of a Loan in accordance with the terms and conditions
hereof shall discharge the obligations of the Borrower under the Promissory Note
evidencing such Loan to the extent of such payment.

                               KfW Loan Agreement



                                      -7-


          3.05 Selection of Fixed Rates. Not more than 15 and not less than
seven Business Days prior to a proposed borrowing of a Loan hereunder or prior
to the last day of an Interest Period for any Floating Rate Loan, the Borrower
may request that KfW advise the Borrower on an indicative basis (which shall not
be binding) of KfW's best estimate of what the expected Applicable Base Rate
would be for a Fixed Rate Loan with a Fixed Rate Period commencing on the date
of borrowing of the proposed Loan or on the last day of such Interest Period, as
the case may be, and ending on the Final Maturity Date; provided, however, that
any change in such Applicable Base Rate from that so advised by KfW shall result
only from a change in KfW's funding costs.

          3.06 Consolidation of Applicable Base Rate for Fixed Rate Loans. In
the event that more than one Fixed Rate Loan is outstanding, KfW may in its own
discretion consolidate the Applicable Base Rates for Fixed Rate Loans
outstanding on such date into a single interest rate corresponding to the
weighted average of the Applicable Base Rates for such Fixed Rate Loans, rounded
down to 1/10,000 if the fifth decimal to be omitted is below 5 or rounded up to
1/10,000 if the fifth decimal to be omitted is 5 or above. Commencing with the
first Payment Date following such consolidation, such weighted average interest
rate shall constitute the Applicable Base Rate for the further computation and
payment of interest for such consolidated Fixed Rate Loans.

                                   ARTICLE IV

                                   COMMISSIONS

          4.01 Commitment Commission. The Borrower agrees to pay KfW a
commitment commission on the daily unborrowed amount of the Commitment which may
be reduced or terminated as contemplated in Section 2.03 of the Master
Participation Agreement for the period from and including the date of this
Agreement to but excluding the earliest of (a) the date the Commitment is
borrowed in full, (b) the date the Commitment is terminated and (c) the
Availability Period End Date, at a rate per annum equal to 0.25%. Accrued
commitment commission under this Section 4.01 shall be payable quarterly, in
arrears, on each Interest Payment Date and on each date falling three calendar
months after each such Interest Payment Date, with the last installment of the
commitment commission hereunder to be paid on the Availability Period End Date.

          4.02 Loan Management Commission. The Borrower shall pay to KfW an
upfront fee equal to 1% of the Commitment (determined as of the date of this
Agreement) payable within 30 days from and after the date of this Agreement.

          4.03 Facility Fee. On the date of disbursement of the initial Advance,
the Borrower agrees to pay a facility fee (the "Facility Fee") in such amount as
KfW shall determine is necessary to compensate it for costs and expenses
associated with the HERMES Guarantee. The Facility Fee as determined by KfW
shall be binding on the Borrower. If the Facility Fee or a portion thereof is
refunded to KfW by HERMES, KfW shall reimburse the Borrower in an amount equal
to the amount refunded to KfW by HERMES promptly upon receipt of such refund
from HERMES. If the Facility Fee exceeds the amount set forth in Section 2.01,
the Borrower shall pay the full amount of the Facility Fee (including such
excess) to KfW in accordance with this Section 4.03.

                               KfW Loan Agreement



                                      -8-


                                    ARTICLE V

                              THE HERMES GUARANTEE

          5.01 The HERMES Guarantee. KfW's rights to receive payment from the
Borrower under this Agreement shall be guaranteed by the Federal Republic of
Germany, pursuant to the HERMES Guarantee.

          5.02 Information. Subject to Section 12.10 of the Master Participation
Agreement and the generally applicable procedures of KfW in respect of
confidential commercial information, KfW shall be entitled to give information
relating to the Sulfide Project and to the KfW Loan Agreement to representatives
of the Federal Republic of Germany having any responsibility in connection with
the HERMES Guarantee and its representatives and advisors. Furthermore, subject
to Section 12.10 of the Master Participation Agreement and the generally
applicable procedures of KfW in respect of confidential commercial information,
KfW and the representatives of the Federal Republic of Germany shall be entitled
to give information relating to the KfW Loan Agreement to international
organizations entrusted with the collection of statistical data, particularly
data in connection with debt servicing.

          5.03 KfW's Right to Demand Information and Give Approval Regarding
Export Contracts. The Borrower shall inform KfW without delay of any event that,
in its reasonable judgment, could be reasonably expected to materially impede or
endanger the implementation of the Export Contracts according to schedule. The
Borrower shall not, without the prior written consent of KfW (which may not be
unreasonably withheld), agree to any modification of or amendment to the Export
Contracts that (a) reduces the total price of the Export Contracts below
US$22,500,000 or (b) changes the Exporter under such Export Contracts. In
addition, the Borrower shall inform KfW without delay of its own accord of any
modification of or amendment to the Export Contracts that may materially affect
the volume of goods and services or any other material provision of the Export
Contracts. The Borrower shall on demand furnish any information reasonably
requested by KfW regarding the Export Contracts.

                                   ARTICLE VI

                                   PREPAYMENT

          6.01 Voluntary Prepayments.

     (a) The Borrower shall have the right to prepay the Loans, in whole or in
part, without premium or penalty other than as required by Sections 6.01(b) and
Section 6.03 hereof, at any time or from time to time in accordance with Section
3.05 of the Master Participation Agreement; provided, however, that each
prepayment of a Fixed Rate Loan, and each prepayment of a Floating Rate Loan on
a date other than the last day of the then current Interest Period, shall be
accompanied by, and the Borrower hereby agrees to pay to KfW on the date of such
prepayment, payment of the prepayment compensation (if any) required under
Section 6.03 hereof and reimbursement of funding losses or expenses (if any)
required under Section 3.11 of the Master Participation Agreement. Partial
prepayment shall be applied to the Loans in accordance with Section 3.08 of the
Master Participation Agreement.

                               KfW Loan Agreement



                                      -9-


     (b) Notwithstanding any provision herein to the contrary, if the Borrower
makes a voluntary prepayment of all or any portion of the principal outstanding
amount of any Floating Rate Loan or Fixed Rate Loan at any time prior to the
Final Maturity Date with the proceeds of replacement debt obtained (either at
the time or within a period of one year from the date of such voluntary
prepayment) from a Person other than the Parent Companies or an Affiliate of the
Parent Companies, the Borrower shall, on the date that such replacement debt is
obtained, pay to KfW a prepayment fee equal to one-half of one per cent (0.5%)
of the aggregate principal amount of Floating Rate Loans and Fixed Rate Loans
prepaid by the Borrower.

     (c) Notwithstanding any provisions herein to the contrary, if KfW exercises
its rights to suspend, cancel or terminate its aggregate Committed Amount
pursuant to Section 12.03 (other than by reason of, directly or indirectly,
improper acts or inactions of the Borrower), then the Borrower may prepay all or
any portion of any Loan without prepayment premium or penalty of any kind
whatsoever.

          6.02 Pro Rata Prepayment. The extent to which payments or prepayments
by the Borrower to any Senior Lender in respect of the Senior Loan Obligations
must be a Pro Rata Payment shall be determined in accordance with Section 3.04
of the Master Participation Agreement. KfW may waive its right to receive any
such prepayment without prejudice to its right to receive any subsequent
prepayment. Each prepayment of Loans under this Section 6.02 shall be
accompanied by the prepayment compensation (if any) required under Section 6.03
hereof and amounts (if any) then payable under Section 3.11 of the Master
Participation Agreement.

          6.03 Prepayment Compensation for Fixed Rate Loans. Without duplication
of any compensation payable under Section 3.11 of the Master Participation
Agreement, upon any payment prior to scheduled maturity (whether pursuant to
this Article VI or Article XII hereof or otherwise) of any principal of any
Fixed Rate Loan, in whole or in part if (a) the sum of the interest payments
which (in the absence of such prepayment) would have been payable on each
installment of such Loan (or portion thereof) so prepaid, on each Payment Date
from the date of such prepayment to the original scheduled maturity date of such
installment, at the applicable rate for such Loan specified in Article III
hereof minus the applicable Margin (for purposes of this Section 6.03, the
"Prepayment Interest") exceeds (b) the sum of the interest payments which would
be received if the principal amount of each installment of such Loan (or portion
thereof) so prepaid were re-invested, for the period from the date of such
prepayment to the original scheduled maturity date hereunder of such
installment, at the Reinvestment Rate (as defined below) (for purposes of this
Section 6.03, the "Reinvestment Interest"), the Borrower agrees to pay KfW a
prepayment commission in respect of each such prepayment in an amount (computed
as of the date of such prepayment) equal to the Present Value (as defined below)
of the amount of such excess.

     For purposes of this Section 6.03, "Reinvestment Rate" shall mean, in
respect of each installment of principal prepaid, the rate which appears on the
Reuters Screen RTRTSY1 Page at or about 4:00 p.m. (Frankfurt time) on a date
selected by KfW occurring on or within five Eurodollar Business Days prior to
the date of such prepayment, for actively traded U.S. Treasury obligations
having substantially the same scheduled maturity as such installment
(interpolating, where appropriate, between the yield to maturity quotations for
the next shorter and next longer

                               KfW Loan Agreement



                                      -10-


maturities for any Loan installment scheduled to mature at a time for which no
such yield quotation is expressed); and the "Present Value" of any amount
receivable or deemed receivable on a specified future date shall mean such
amount discounted to present value (from such specified future date to the date
of such prepayment) at the Reinvestment Rate.

          6.04 Mandatory Prepayments. The Borrower shall make Mandatory
Prepayments as set forth in Section 3.06 of the Master Participation Agreement.
KfW may waive its right to receive any Mandatory Prepayments without prejudice
to its right to receive any subsequent Mandatory Prepayment. Each prepayment of
Loans under this Section 6.04 shall be accompanied by the prepayment
compensation (if any) required under Section 6.03 hereof and amounts (if any)
then payable under Section 3.11 of the Master Participation Agreement.

     In case of mandatory prepayments made in accordance with Section 3.06 of
the Master Participation Agreement, the Borrower shall, upon KfW's demand,
prepay the outstanding Loans in full (or in the amount of the affected portion
thereof) together with accrued interest thereon and all other amounts payable to
KfW hereunder (including amounts, if any, payable under Section 6.03 hereof and
Section 3.11 of the Master Participation Agreement), in the case of each
outstanding Floating Rate Loan, on the last day of the then current Interest
Period for such Floating Rate Loan and, in the case of each outstanding Fixed
Rate Loan, on the first Payment Date occurring at least three months after the
date of such demand (or, in the case of any Loan, on such earlier date as shall
be certified by KfW as being the last permissible date for such prepayment under
the relevant law, rule, regulation, treaty or directive).

                                   ARTICLE VII

                                    PAYMENTS

          7.01 Payments. All payments and prepayments on account of the
principal of and interest on the Loans, fees, commissions, indemnities and other
amounts payable under this Agreement or any Promissory Note by the Borrower
shall be made to KfW in Dollars and in immediately available funds, without
set-off, counterclaim or reduction for any reason whatsoever, by credit to an
account designated by KfW at Citibank in New York, New York (Swift Code: BIC
CITIUS33, Account number: 10926093, Account name: KfW) and designating KfW in
Frankfurt am Main, Germany as the beneficiary (Swift Code: KFWIDEE, Payment
Reference: yyyymmdd/Cerro Verde (8137091719), not later than 11:00 a.m. New York
City time on the date on which such payment shall become due.

          7.02 Non-Business Days. If any payment under this Agreement falls due
on a day which is not a Business Day, the due date therefor shall be extended to
the next succeeding Business Day and interest shall be payable for any principal
so extended for the period of such extension.

          7.03 Computations. Interest hereunder calculated on the basis of the
quotations referred to in clause (a) and clause (b) of the definition of
"Applicable Base Rate" shall be computed on the basis of a year of 360 days and
actual days elapsed. Prepayment compensation under Section 6.04 hereof, shall be
computed on the basis of a year of 365 days (or 366 days, as the case may be)
and actual days elapsed. Commitment commission hereunder shall be computed on
the basis of a year of 360 days and actual days elapsed.

                               KfW Loan Agreement



                                      -11-


                                  ARTICLE VIII

                               CERTAIN INDEMNITIES

          8.01 Increased Cost of Loans. In the event that, at any time or from
time to time, as a result of any change in any applicable laws (including the
adoption of any new laws), rules, regulations, treaties, directives or requests
of general applicability of any applicable governmental, fiscal or monetary
authority (whether imposing or modifying taxation (other than Excluded Taxes and
Indemnified Taxes, provision for which is made in Section 8.01 hereof), reserve
or special or other deposit requirements or any other requirements or
conditions, and whether or not having the force of law), or in the
interpretation or administration thereof by any court or any such authority
charged with the interpretation or administration thereof (including, without
limitation, any change in the regulations implementing the proposals for a
risk-based capital framework described by the Basle Committee on Banking
Regulations and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards" dated July 1988, as
modified and supplemented), or by reason of KfW's compliance with any such law,
rule, regulation, treaty, directive or request, the cost to KfW of making,
maintaining or funding the Loans is increased, or any amount (or the effective
return on any amount) received or receivable by KfW hereunder or under the
Promissory Notes is reduced, or the rate of return to be earned by KfW with
respect to any Loan is reduced, or KfW is required to make any payment in
connection with any transactions contemplated hereby, by or in an amount
reasonably deemed by KfW to be material, then the Borrower will on demand by KfW
from time to time pay KfW such additional amount or amounts as (in the good
faith determination of KfW) are necessary to compensate KfW for such increased
cost, reduction or payment; provided that, KfW shall not be entitled to make any
claim for additional costs under this Section 8.01, to the extent any such
additional cost is attributable directly or indirectly to the application of,
compliance with or implementation of any part or "pillar" of the International
Convergence of Capital Measurement Standards: a Revised Framework, published by
the Basle Committee on Banking Supervision in June 2004 (as in effect on the
date hereof), or any implementation or interpretation thereof, whether by any
law or regulation, or otherwise, or to any change by KfW from one method of
calculating capital adequacy to another, insofar as such additional costs are
directly or indirectly attributable to credit-related events or circumstances
that are specific to KfW and not solely to general regulatory guidelines or
requirements imposed on the banking sector generally. Any such demand by KfW
shall be accompanied by a certificate from KfW stating the basis for its demand
and setting forth in reasonable detail the calculations of the amount thereof.

          8.02 Alternative Interest Rate. If, with respect to any Interest
Period for any Floating Rate Loan or with respect to any Default Interest
Period, KfW determines in its reasonable judgment that quotations of interest
rates of the types referred to in clause (a) in the definition of "Applicable
Base Rate" are not being provided in the relevant amounts or for the relevant
maturity for purposes of determining the "Applicable Base Rate" for such
Interest Period or Default Interest Period, KfW shall promptly give notice
thereof to the Borrower, and the following provisions shall apply:

          (a) During the thirty-day period following the date of any such notice
     (the "Negotiation Period"), KfW and the Borrower will negotiate in good
     faith for the purpose of agreeing upon an alternative, mutually acceptable
     basis (the "Substitute

                               KfW Loan Agreement



                                      -12-


     Basis") for determining the rate of interest to be applicable to such Loan
     from time to time and if, at the expiration of the Negotiation Period, KfW
     and the Borrower have agreed upon a Substitute Basis and any required
     governmental approvals therefor have been obtained, the Substitute Basis
     shall take effect from such date (including, if agreed, such retroactive
     date) as KfW and the Borrower may in such circumstance agree.

          (b) If at the expiration of the Negotiation Period, a Substitute Basis
     shall not have been agreed upon or any required governmental approvals
     therefor shall not have been obtained, KfW shall notify the Borrower of the
     cost to KfW (as reasonably determined by it) of funding and maintaining the
     outstanding affected Loan for such Interest Period or Default Interest
     Period, and the interest payable to KfW on such Loan for such Interest
     Period or Default Interest Period shall be interest at a rate per annum
     equal to the cost of funding and maintaining such Loan as so notified by
     KfW plus the applicable Margin (and, as appropriate, the Default Margin).

The procedures specified in (a) and (b) above shall apply to each relevant
period succeeding the first such period to which they were applied unless and
until KfW notifies the Borrower that the condition referred to in the first
sentence of this Section 8.02 no longer exists (which notice KfW agrees to give
promptly following the cessation of such condition) or until each affected
Floating Rate Loan is converted into a Fixed Rate Loan pursuant to Section 2.04
hereof, whereupon interest on such Loan shall again be determined in accordance
with the provisions of Section 3.02 hereof, effective commencing on the first
Payment Date next succeeding the date of such notice or (if a Fixed Rate Period
is so established) the first day of such Fixed Rate Period.

          8.03 Mitigation. If an event or circumstance occurs that would entitle
KfW to exercise any of the rights or benefits afforded by this Article VIII,
KfW, promptly upon becoming aware of the same, shall take such steps as may be
reasonably available to it to eliminate or mitigate the effects of such event or
circumstance; provided, however, that KfW shall not be under any obligation to
take any steps that, in its sole discretion, would (a) result in its incurring
additional costs or taxes or (b) otherwise be disadvantageous to KfW.

                                   ARTICLE IX

                              CONDITIONS OF LENDING

          9.01 Initial Loan. The obligation of KfW to make the initial Loan to
be made by it hereunder is subject to the satisfaction (or waiver by KfW) of the
following conditions:

          (a) Satisfaction of Common Conditions Precedent. The common conditions
     precedent to the initial disbursement of the Senior Facility Loans set
     forth in Section 5.01 of the Master Participation Agreement shall have been
     satisfied (or waived as provided therein).

          (b) HERMES Guarantee. The HERMES Guarantee shall have been issued,
     shall be the legal, valid and binding obligation of HERMES (acting in its
     capacity as an agent of the government of the Federal Republic of Germany),
     shall be in full force and effect, shall have been duly registered with the
     relevant governmental or other authorities

                               KfW Loan Agreement



                                      -13-


     and all relevant fees and charges relating thereto which are then due and
     payable shall have been paid in full.

          (c) Export Contracts. The Export Contracts shall not have been
     cancelled, rescinded or terminated for reasons other than performance of
     their terms.

          (d) No modifications of Export Contracts. No modification of, or
     amendment to, the Export Contracts that will (i) reduce the total price of
     the Export Contracts below US$22,500,000 or (ii) change the Exporter under
     the Export Contracts, in each case without the prior consent of KfW.

          (e) Drawdown Certificate. Not less than 15 Business Days prior to the
     proposed date of borrowing, KfW shall have received a KfW Loan Agreement
     Drawdown Certificate in substantially the form set forth in Exhibit C
     hereof (a "Drawdown Certificate"), duly completed and executed by the
     Borrower and the Borrower shall have provided the Trustee and the
     Administrative Agent with a copy of such Drawdown Certificate.

          9.02 Additional Conditions. The obligation of KfW to make each Loan
(excluding the initial Loan which is subject to the conditions described in
Section 9.01 above) hereunder is subject to the further conditions:

          (a) Satisfaction of Common Conditions Precedent. The common conditions
     precedent set forth in Section 5.02 of the Master Participation Agreement
     shall have been satisfied (or waived as provided therein);

          (b) Drawdown Certificate. Not less than 15 Business Days prior to the
     proposed date of borrowing KfW shall have received a KfW Loan Agreement
     Drawdown Certificate in substantially the form set forth in Exhibit C
     hereof (a "Drawdown Certificate"), duly completed and executed by the
     Borrower and the Borrower shall have provided the Trustee and the
     Administrative Agent with a copy of such Drawdown Certificate; and

          (c) HERMES Guarantee. The HERMES Guarantee shall not have been
     revoked, canceled, restricted or suspended, unless such revocation,
     cancellation, restriction or suspension was directly and proximately caused
     by (i) the failure of KfW to pay any applicable guarantee fee after the
     Borrower has paid to KfW all amounts demanded in respect thereof pursuant
     to Section 4.03 hereof when due or (ii) misrepresentations by KfW to HERMES
     unless such misrepresentations were based upon information supplied to KfW
     in writing by the Borrower or the Parent Companies.

                                    ARTICLE X

                                    COVENANTS

     The Borrower has undertaken certain covenants as set forth in Article VII
of the Master Participation Agreement. The rights of KfW in respect of such
covenants are set forth in the Master Participation Agreement and Master
Security Agreement. The Borrower further

                               KfW Loan Agreement



                                      -14-


covenants and agrees with KfW that it shall use the loan proceeds solely in
accordance with the terms of Section 2.01 hereof.

                                   ARTICLE XI

                         REPRESENTATIONS AND WARRANTIES

          The Borrower has given certain representations and warranties in
Article VI of the Master Participation Agreement. The rights of KfW in respect
of such representations and warranties are set forth in the Master Participation
Agreement and Master Security Agreement.

                                   ARTICLE XII

                           EVENTS OF DEFAULT; REMEDIES

          12.01 Events of Default. Subject to Section 12.02, each of the MPA
Events of Default set forth in Section 9.01 of the Master Participation
Agreement is hereby incorporated by reference in this Agreement as if fully set
forth herein, in accordance with their terms, unless waived in accordance with
the Master participation Agreement.

          12.02 Remedies. Upon the occurrence and Continuance of an MPA Event of
Default, KfW shall only have each of the rights and remedies provided in the
Master Participation Agreement and the Master Security Agreement exercisable
only pursuant to and in accordance with the terms thereof.

          12.03 Suspension, Cancellation or Termination of Commitment. In the
event that HERMES revokes, cancels, restricts or suspends the HERMES Guarantee
(other than by reason of improper acts or inactions on the part of KfW) then (i)
KfW shall have the right to suspend, cancel or terminate its Aggregate Committed
Amount, (ii) KfW shall not be required to disburse or fund any additional Loans
and (iii) the provisions of Section 3.10 of the Master Participation Agreement
shall apply.

                                  ARTICLE XIII

                                  MISCELLANEOUS

          13.01 No Waiver. No failure on the part of KfW to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or the Promissory Notes shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege under this Agreement or the Promissory Notes preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
Except as expressly provided herein and in the Master Participation Agreement,
the remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

          13.02 No Immunity. To the extent that any party hereto has or
hereafter may acquire any immunity from any court or from jurisdiction of any
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement and the Promissory Notes.

                               KfW Loan Agreement



                                      -15-


          13.03 Jurisdiction and Service of Process. The provisions of Section
12.16 of the Master Participation Agreement shall be deemed incorporated herein
mutatis mutandis. The Borrower confirms its appointment of CT Corporation as
agent for process pursuant to Section 12.16(b) of the Master Participation
Agreement.

          13.04 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          13.05 Assignments and Participations; Information.

     (a) The Borrower may not assign its rights or obligations hereunder or
under the Promissory Notes without the prior consent of KfW.

     (b) KfW may at any time transfer the Loans, the Promissory Notes and
Commitments to a wholly-owned subsidiary of KfW whose jurisdiction is Germany,
and in the event of such transfer all references herein to "KfW" shall be deemed
to such wholly-owned subsidiary.

     (c) KfW may at any time sell, assign, transfer, grant participations in, or
otherwise dispose of a portion of the Loans, the Promissory Notes or the
Commitment (collectively, "Transferred Interests") (i) to any other Person
subject to Section 12.13 of the Master Participation Agreement or (ii) if an MPA
Event of Default has occurred and is continuing, to HERMES or any agency,
instrumentality or political subdivision of Germany (for purposes of this
Section 13.05, collectively, "HERMES" and, together with any transferee in
accordance with clause (i) of this Section 13.05(c), "Transferees"). Upon the
execution and delivery by any Transferee to the Borrower of an instrument in
writing pursuant to which such Transferee agrees to assume the obligations of
KfW hereunder with respect to the Transferred Interest, such Transfer will be
effective and such Transferee may exercise all legal and equitable rights and
remedies, and shall be entitled to the benefits of Article VII hereof, as if
such Transferee were a lender hereunder holding a "Loan" in the amount of the
Transferred Interest held by it.

     (d) KfW may furnish any information concerning the Borrower in the
possession of KfW from time to time to Transferees (including prospective
Transferees) subject to the confidentiality provisions contained in Section
12.10 of the Master Participation Agreement.

     (e) Notwithstanding anything in the Master Participation Agreement to the
contrary, KfW shall be entitled as and when required or requested by HERMES to
give information to the representatives of HERMES and international
organizations entrusted with the collection of statistical data, particularly in
connection with debt servicing, in connection with the implementation of this
Agreement.

     (f) Except as otherwise expressly provided in this Agreement, this
Agreement is legally independent of all Export Contracts. In connection with the
performance of its obligations under this Agreement, the Borrower may in no
event raise objections on the basis of the Export Contracts for which the
financing is in part provided or any other contract providing for the export of
goods or services.

                               KfW Loan Agreement



                                      -16-


          13.06 Amendments, Etc. Subject to Article X of the Master
Participation Agreement, the provisions of this Agreement may not be amended,
modified or waived except by an instrument or instruments in writing or by
facsimile transmission signed by the Borrower and KfW.

          13.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.

          13.08 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York, New York, U.S. is of
the essence, and Dollars shall be the currency of account in all events. The
obligations of the Borrower to make payments hereunder shall not be discharged
by an amount paid in any currency other than Dollars, whether pursuant to a
court or arbitral judgment or otherwise, to the extent that the amount so paid
upon conversion to Dollars and transferred to New York, New York under normal
banking procedures does not yield the amount of Dollars due, and the Borrower
hereby, as a separate obligation and notwithstanding any such judgment, agrees
to indemnify the Trustee, the Appointed Parties' Agents and each Senior Facility
Lender against, and to pay to the Trustee, the Appointed Parties' Agents and
each Senior Facility Lender on demand, in Dollars, any difference between the
sum originally due in Dollars and the amount of Dollars received upon any such
conversion and transfer. The provisions of Section 12.06 of the Master
Participation Agreement shall be deemed incorporated herein in their entirety.

          13.09 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower and KfW and their respective permitted
successors and assigns.

          13.10 Stamp Taxes. The Borrower agrees to pay all stamp and other
duties or taxes imposed by any taxing authority of or in Peru on this Agreement,
the Loans or the Promissory Notes, or on the enforcement of any thereof or of
any rights under any thereof, or on the introduction of any thereof before any
court or other authority, and shall indemnify KfW against all liabilities,
costs, claims and expenses resulting from any failure to pay or delay in paying
any such duty or tax.

          13.11 Survival. Without limitation, the obligations of the Borrower
under Sections 6.03, 8.01 and 13.10 hereof and Sections 3.09 and 3.11 of the
Master Participation Agreement and the obligations of KfW under Section 3.09 of
the Master Participation Agreement shall survive the repayment of the Loans and
the cancellation of the Promissory Notes.

          13.12 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. Any gap resulting as a consequence of any
such invalidity shall be filled by a provision consistent with the purpose of
this Agreement.

          13.13 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND KfW HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,

                               KfW Loan Agreement



                                      -17-


ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PROMISSORY NOTES OR
THE TRANSACTIONS CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR OTHER
THEORY.

          13.14 Notices. The provisions of Section 12.11 of the Master
Participation Agreement shall be deemed incorporated herein in its entirety.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier and received or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.

          13.15 English Language. This Agreement is made in the English
language. Any translation of this Agreement shall have no legal validity.

          13.16 No Restriction. Nothing herein shall in any way limit the
Borrower's ability to seek damages from Exporter under any of the Export
Contracts if the goods delivered pursuant to the Export Contract do not meet
contract specifications set forth under such Export Contract.

                               KfW Loan Agreement



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed.

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                               KfW Loan Agreement



                                        KfW


                                        By:
                                            -----------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                               KfW Loan Agreement



                                                                       EXHIBIT A
                                                           to KfW Loan Agreement

                     AMORTIZATION SCHEDULE



                                                 % of the aggregate
                                                   amounts of all
Repayment                                         Advances made by
  Number                                          KfW to be repaid
- ---------                                        ------------------
                                        
     1                                                  6.25
     2                                                  6.25
     3                                                  6.25
     4                                                  6.25
     5                                                  6.25
     6                                                  6.25
     7                                                  6.25
     8                                                  6.25
     9                                                  6.25
    10                                                  6.25
    11                                                  6.25
    12                                                  6.25
    13                                                  6.25
    14                                                  6.25
    15                                                  6.25
    16                                                  6.25


                               KfW Loan Agreement



                                                                       EXHIBIT B
                                                           to KfW Loan Agreement

                        Form of Promissory Note (Pagare)

                              PAGARE NO NEGOCIABLE

Place and date of issuance: Lima Peru, __
Amount US$ __

     FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A.
(the "Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange
and duly incorporated under the laws of the Republic of Peru, registered with
the Public Registry of Companies of Lima, under File No. __, and whose principal
office is at __, Republic of Peru, by this non negotiable (no negociable)
promissory note ("pagare") (the "Promissory Note"), except as permitted in
Section 12.13 (b) of the MPA, unconditionally promises to pay to the order of __
(the "Holder"), against presentment of this note, the sum of __ dollars of the
United States of America (US$ __) (the "Principal Amount"), payable on the dates
set forth in the following payment schedule (each date, a "Payment Date") and in
the amounts indicated next to the applicable Payment Date, provided that the
principal amount to be paid to the Holder on a Payment Date shall not exceed the
principal amount hereof outstanding immediately prior to such Payment Date.



                       PRINCIPAL AMOUNT                           PRINCIPAL AMOUNT
    PAYMENT DATE         TO BE REPAID          PAYMENT DATE         TO BE REPAID
- --------------------   ----------------   ---------------------   ----------------
                                                         
First Payment Date            __          48th month after the           __
                                          First Payment Date
6th month after the           __          54th month after the           __
First Payment Date                        First Payment Date
12th month after the          __          60th month after the           __
First Payment Date                        First Payment Date
18th month after the          __          66th month after the           __
First Payment Date                        First Payment Date
24th month after the          __          72nd month after the           __
First Payment Date                        First Payment Date
30th month after the          __          78th month after the           __
First Payment Date                        First Payment Date
36th month after the          __          84th month after the           __
First Payment Date                        First Payment Date
42nd month after the          __          90th month after the           __
First Payment Date                        First Payment Date


                               KfW Loan Agreement



                                       -2-


     The Borrower also promises to pay to the Holder interest on the outstanding
and unpaid principal amount of this Promissory Note, from the date hereof until
the last Payment Date, at an annual rate of the Base Rate plus the Applicable
Margin (the "Interest Rate"), such interest to accrue semiannually on the
outstanding principal amount during the Interest Period. Interest shall be
payable in arrears on each Interest Payment Date. All computations of interest
shall be made on the basis of a year of 360 days and actual days elapsed.

     If any payment to be made hereunder is due on a day which is not a Business
Day, such payment shall be made on the immediately succeeding Business Day.

     If the principal amount of this Promissory Note is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
principal amount remaining unpaid shall carry default interest for such period
of time within each related Default Interest Period during which such amount
shall be due and unpaid, at an annual rate equal to the Default Rate.

     The Borrower may prepay on any Payment Date upon at least 60 days' prior
notice, all or part of the outstanding principal amount hereof, so long as, in
connection with a voluntary partial prepayment, the aggregate amount of any such
voluntary partial prepayment equals at least __(7) dollars of the United States
of America (US$__).

     If Borrower prepays all or part of the outstanding principal amount hereof
[on a date other than the last day of the then current Interest Period](8), the
Borrower shall pay to the Holder [(a) a prepayment commission equal to the
Present Value of the excess (if any) of (i) the sum of the interest payments
which (in the absence of such prepayment) would have been payable on each
installment hereof (or portion thereof) so prepaid, on each Payment Date from
the date of such prepayment to the original scheduled maturity date of such
installment, at the Base Rate over (ii) the sum of the interest payments which
would be received if the principal amount of each installment hereof (or portion
thereof) so prepaid were re-invested, for the period from the date of such
prepayment to the original scheduled maturity date hereunder of such
installment, at the Reinvestment Rate (as defined below), and (b)](9)
reimbursement of its funding losses or expenses (if any) related to such
prepayment; provided that, if the Borrower makes a voluntary prepayment of all
or any portion of the principal outstanding amount hereof with the proceeds of
replacement debt obtained (either at the time or within a period of one year
from the date of such voluntary prepayment) from a person other than the Parent
Companies or an Affiliate of the Parent Companies, the Borrower shall, as of the
date that such replacement debt is obtained, pay to the Holder a prepayment fee
equal to 0.5% of the aggregate principal amount prepaid and provided further
that if the Holder suspends, cancels or terminates its commitments to lend to
the Borrower under the credit facility, as contemplated in Section 12.03 of the
Loan Agreement, the

- ----------
(7)  Insert pro rata amount of the minimum prepayment amount applicable to the
     Advance(s) evidenced by the Promissory Note.

(8)  Include this bracketed language only for Floating Rate Loans.

(9)  Include this bracketed language only for Fixed Rate Loans.

                               KfW Loan Agreement



                                       -3-


Borrower may prepay all or any portion of the outstanding amount hereof without
prepayment premium or penalty of any kind whatsoever.

     Each prepayment of the outstanding principal amount hereof shall (unless
such prepayment repays in full such outstanding principal amount) be applied to
prepay ratably each outstanding installment of principal hereof remaining to be
paid as of the date of such prepayment.

     For purposes of this Promissory Note, the following terms shall have the
following meanings:

     "Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.

     "Affiliate" means, with respect to any Person (the "First Person"), any
other Person (the "Second Person") which directly or indirectly Controls, or is
under common Control with, or is Controlled by, such First Person.

     "Applicable Margin" means 0.35% per annum.

     "Base Rate" means, for any Interest Period or Default Interest Period
therefor, [the interest rate per annum for dollar deposits for a period equal to
(or, if there is no equal, then most comparable to) such Interest Period or
Default Interest Period which appears on Reuters Screen LIBOR01 Page (or such
other page as may replace that page on that service for the purpose of
displaying the British Bankers Association Interest Settlement Rate) at or about
11:00 a.m. London time on the date two Eurodollar Business Days prior to the
first day of such Interest Period or Default Interest Period; provided that, if
no such rate appears on Reuters Screen LIBOR01 Page (or such other page as may
replace that page on that service for the purpose of displaying the British
Bankers Association Interest Settlement Rate) for any relevant Interest Period
or Default Interest Period, the Base Rate shall mean for each Loan during such
Interest Period or Default Interest Period the rate per annum determined by the
Holder which appears on the page designated Page 3750 on the Moneyline Telerate
Inc. at or about 11:00 a.m. London time on the date two Eurodollar Business Days
prior to the first day of such Interest Period or Default Interest Period](10)

     "Business Day" means a day on which banks are generally open for business
in London, England, New York, New York, United States, Tokyo, Japan, Frankfurt
am Main, Germany and Lima, Peru.

     "Collateral Agent" means Citibank del Peru S.A. in its capacity of onshore
collateral agent for the Holder according to the MSA.

- ----------
(10) Insert (i) this bracketed language for Floating Rate Loans or (ii) the
     Fixed Rate calculated in accordance with clause (b) of the definition of
     Applicable Base Rate.

                               KfW Loan Agreement



                                       -4-


     "Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.

     "Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.

     "Control" (including, with its correlative meanings "Controlled by" and
"under common Control with") means possession, directly or indirectly, of power
(whether or not exercised) to direct or cause the direction of or exercise a
controlling influence on management or policies (whether through legal or
beneficial ownership of securities or partnership or other ownership interests,
by contract, representation on the board of directors or similar governing body
or otherwise).

     "Default Interest Period" means each successive period (not in excess of
six months) while any amount payable by the Borrower hereunder is in default, as
the Holder shall choose in its sole discretion, the first such period to
commence as of the date on which such amount in default becomes due and each
succeeding such period to commence immediately upon the expiry of the
immediately preceding such period.

     "Default Rate" means the applicable Interest Rate (including the Applicable
Margin) plus 2% per annum.

     "Eurodollar Business Day" means any day on which banks are generally open
for business in London, England.

     "First Payment Date" means the earlier of (i) the March 20 or the September
20 next occurring after the Commercial Production Start-up Date, and (ii) March
20, 2008.

     "Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.

     "Governmental Authority" means any national, state, county, city, town,
village, municipal or other local governmental department, commission, board,
bureau, agency, authority or instrumentality of any nation that affects or may
affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.

     "Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.

     "Interest Period" means any of the following periods:

                               KfW Loan Agreement



                                       -5-


          (i) on or prior to the First Payment Date, each period commencing on
     an Interest Payment Date (or with respect to the first Interest Period on
     the date hereof) and ending on the day immediately preceding the next
     succeeding Interest Payment Date (including the first day and the last day
     of such period); and

          (ii) thereafter, each period commencing on a Payment Date and ending
     on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

     "Loan Agreement" means the Loan Agreement dated as of September 30, 2005
between the Borrower and KfW.

     "MPA" means the Master Participation Agreement dated as of September 30,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
and Mizuho Corporate Bank, Ltd.

     "MSA" means the Master Security Agreement dated as of September 30, 2005
entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.

     "Parent Companies" means, collectively, Phelps Dodge Corporation, Sumitomo
Metal Mining Co. Ltd., Sumitomo Corporation and Compania de Minas Buenaventura
S.A.A.

     "Peruvian Income Tax Act" means the Legislative Decree 774 of December 31,
1993, as amended.

     "Present Value" of any amount receivable or deemed receivable on a
specified future date, means such amount discounted to present value (from such
specified future date to the date of such prepayment) at the Reinvestment Rate.

     "Reinvestment Rate" means, in respect of each installment of principal
prepaid, the rate which appears on the Reuters Screen RTRTSY1 Page at or about
4:00 p.m. (Frankfurt time) on a date selected by the Holder occurring on or
within five Eurodollar Business Days prior to the date of such prepayment, for
actively traded U.S. Treasury obligations having substantially the same
scheduled maturity as such installment (interpolating, where appropriate,
between the yield to maturity quotations for the next shorter and next longer
maturities for any Loan installment scheduled to mature at a time for which no
such yield quotation is expressed).

     "Reuters Screen LIBOR01 Page" shall mean the display page so designated on
the Reuter Monitor Money Rates Service (or such other page as may replace that
page on that service for the purpose of displaying London interbank offered
rates for Dollar deposits).

     "Sulfide Project" means the Borrower's development of a primary sulfide
portion of the ore body beneath the oxide portion of the ore body currently in
production at its Cerro Verde copper mine, located in the Districts of Uchumayo
and Yarabamba, Province of Arequipa, Peru.

                               KfW Loan Agreement



                                       -6-


     "Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.

     All payments by the Borrower of principal and interest hereunder shall be
made in dollars of the United States of America and in immediately available
funds, without set-off, counterclaim or reduction for any reason whatsoever, by
credit to an account designated by the Holder at Citibank in New York, New York
(Swift Code: BIC CITIUS33, Account number: 10926093, Account name: KfW) and
designating the KfW in Frankfurt am Main, Germany as the beneficiary (Swift
Code: KFWIDEE, Payment Reference: yyyymmdd/Cerro Verde (8137091719), not later
than 11:00 a.m. New York City time on the date on which such payment shall
become due.

     Any and all payments made by or on account of the Borrower in respect of
any obligation hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any and all present or future Taxes
(excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority of the Republic of Peru,
unless such deduction or withholding is required by an applicable Government
Rule, in which case the following paragraph shall apply.

     If the Borrower shall be required by law to deduct any Indemnified Taxes
now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.

     The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.

                               KfW Loan Agreement



                                       -7-


     The Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of Downtown Lima (Lima-Cercado) and of any Federal or State court
located in the Borough of Manhattan, The City of New York, as the Holder hereof
may elect for any proceeding arising out of or relating to this Promissory Note.
The Borrower waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding.

     The Parties further agree that, without prejudice to the law of the State
of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.

     This Promissory Note is issued in Spanish and English. The Parties agree
that the applicable version of this Promissory Note will be (i) the Spanish
version in case the jurisdiction of the Courts of Downtown Lima (Lima-Cercado)
is the jurisdiction elected by the Holder, or be (ii) the English version in
case the jurisdiction of any Federal or State court located in the Borough of
Manhattan, The City of New York is the jurisdiction elected by the Holder. In
case of discrepancies between the Spanish and English versions (i) the Spanish
version shall prevail when the Courts of Downtown Lima (Lima-Cercado) or other
Spanish speaking jurisdiction is the jurisdiction elected by the Holder, and
(ii) the English version shall prevail when the Federal or State court located
in the Borough of Manhattan, The City of New York or any other non-Spanish
speaking jurisdiction is the jurisdiction elected by the Holder.

Lima, __

By: Sociedad Minera Cerro Verde, S.A.A.
Taxpayer Registry No.: 20170072465
Name of authorized officer: __
Identification Card No __
Power register in Entry No. __ of the Public Registry

                               KfW Loan Agreement



                                                                       EXHIBIT C
                                                           to KfW Loan Agreement

                         [Form of Drawdown Certificate]

To: KfW IPEX-Bank
    Postfach 11 11 41
    D-60 046 Frankfurt/Main

From: SOCIEDAD MINERA CERRO VERDE S.A.A.
                                                           Date: _______________

                               KFW LOAN AGREEMENT
                             Request for drawing no.

X1a1 - Loan No. [__________]
       dated as of [_________]
          for US$[___]

1.   The Borrower hereby requests a [Floating Rate / Fixed Rate] Loan under the
     KfW Loan Agreement in US$ as follows:

     (a)  Drawdown Date: __________________

     (b)  Amount: ______________ US$_____________

2.   The Amount in paragraph 1(b) is made up of:

     (a)  US$______________ in respect of German goods and services supplied by
          Polysius AG; and/or

     [(b) US$_____________ in respect of the Facility Fee charged by HERMES for
          the HERMES Guarantee](11)

3.   The Borrower confirms that:

     (a)  the representation and warranties contained in Article VI of the
          Master Participation Agreement shall be true and correct in all
          material respects as of the date of the initial disbursement;

     (b)  no MPA Default has occurred and is Continuing; and

     (c)  each of the other conditions contained in [Section 5.01 [first
          disbursement only], [Section 5.02 [Conditions Precedent for subsequent
          disbursements only] of the Master Participation Agreement and [Section
          9.01 [initial disbursement only], [Section 9.02 [Conditions Precedent
          for subsequent disbursements only] of the KfW Loan Agreement is
          satisfied on the date of this Request or is expected to be satisfied
          immediately after the disbursement is made (as applicable).

- ----------
(11) [Only applies to disbursement of the initial Advance and shall include 100%
     of the Facility Fee.]

                               KfW Loan Agreement



                                       -2-


4.   The Borrower confirms that the aggregate amount borrowed under the KfW Loan
     Agreement does not exceed 85% of the aggregate amounts of the purchase
     orders placed to date under the Export Contracts plus the amounts borrowed
     to finance the Facility Fee.

5.   The Borrower requests that the amount mentioned under paragraph 1(b) above
     be paid to the Onshore Dollars Account.

6.   Terms defined in the KfW Loan Agreement shall bear the same meanings when
     used in this Request.

                                        BORROWER


                                        By:
                                            ------------------------------------
Authorized Signatory

                               KfW Loan Agreement



                                    Exhibit C

                         Commercial Banks Loan Agreement

                                                                  EXECUTION COPY

================================================================================

                                 LOAN AGREEMENT

                                      among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                   as Borrower

                        EACH OF THE LENDERS NAMED HEREIN,

                                       and

                             CALYON NEW YORK BRANCH,
                             as Administrative Agent

                         Dated as of September 30, 2005

================================================================================



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
APPENDIX 1 - Notice of Borrowing

EXHIBIT A  - Form of Promissory Note
EXHIBIT B  - Amortization Schedule
EXHIBIT C  - Assignment and Acceptance Agreement



                                       -i-



     LOAN AGREEMENT dated as of September 30, 2005 among SOCIEDAD MINERA CERRO
VERDE S.A.A., a sociedad anonima abierta organized under the laws of Peru (the
"Borrower"); each of the Lenders that is a signatory hereto as a "Lender", or
each lender that may from time to time become a Lender, pursuant to Section
11.05(b) hereof, (each, a "Lender" and, collectively, the "Lenders"); and CALYON
NEW YORK BRANCH, as agent for the Lenders (in such capacity, the "Administrative
Agent").

     WHEREAS, On the date hereof, the Borrower, JBIC, the Lead JBIC Arrangers,
KfW, the Lenders and the Administrative Agent have entered into the Master
Participation Agreement (the "Master Participation Agreement"), which sets forth
various terms for the financing of the development of the Sulfide Project;

     WHEREAS, for purposes of financing in part the development of the Sulfide
Project, the Borrower desires that the Lenders make certain loans to it, and the
Lenders wish to make certain loans to the Borrower, all on the terms and
conditions set forth herein and in the Master Participation Agreement.

     NOW THEREFORE, in consideration of the foregoing, the agreements contained
herein and in the Master Participation Agreement and for other good and valid
consideration, the receipt and adequacy of which are hereby expressly
acknowledged, the parties hereto agree as follows:

          Section 1. Definitions and Accounting Matters.

          1.01 Certain Defined Terms. Except as otherwise defined herein,
capitalized terms used herein (including the preamble and recital of this
Agreement) shall have the meanings assigned to such terms in the Master
Participation Agreement (including Schedule Z thereto). For purposes of this
Agreement, the following terms shall have the respective meanings set forth
below:

     "Additional Costs" has the meaning assigned thereto in Section 5.01(a).

     "Advance Date" has the meaning assigned thereto in Section 4.05.

     "Agreement" means this Loan Agreement.

     "Applicable Lending Office" means, for each Lender, the "Lending Office" of
such Lender (or of an affiliate of such Lender) designated on the signature
pages hereof or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time designate pursuant to Section 5.05
as the office by which its Loans are to be made and maintained.

     "Availability Period" means, collectively, the Tranche A Availability
Period and the Tranche B Availability Period.

     "Borrower" has the meaning assigned thereto in the first paragraph of this
Agreement.

                         Commercial Banks Loan Agreement



                                      -2-


     "Borrowing" means Loans made on the same date and as to which a single
Interest Period is in effect pursuant to a Notice of Borrowing.

     "Commitment" means the aggregate of the Tranche A Commitment and the
Tranche B Commitment.

     "Default Interest Period" means each successive period (not in excess of
six months) as the Administrative Agent shall choose (with the consent of the
Majority Bank Lenders), during which any amount payable by the Borrower
hereunder is in default. The first such period shall commence as of the date on
which such amount in default becomes due, and each such succeeding period shall
commence immediately upon the expiry of the immediately preceding period;
provided, however, that in the absence of, or pending consent of the Majority
Bank Lenders, each Default Interest Period has a duration of one month.

     "Default Margin" means, in respect of any principal of any Loan or any
other amount under this Agreement (including interest on a Loan), a rate per
annum equal to 2%.

     "Eurocurrency Liabilities" has the meaning assigned thereto in Regulation
D.

     "Lenders" has the meaning assigned thereto in the first paragraph of this
Agreement.

     "LIBOR Rate" means, with respect to any Interest Period or Default Interest
Period for any Loan, the interest rate per annum for deposits in Dollars, if
any, for a period equal to the relevant interest period which appears on page
3750 on the Moneyline Telerate Inc. (or such other page or pages as shall
replace that page or pages for the purpose of displaying offered rates of
leading banks for London interbank deposits in Dollars) at or about 11:00 a.m.
London time on the second Eurodollar Business Day before and for value on the
first day of the Interest Period or Default Interest Period. If such rate does
not appear on page 3750 on the Moneyline Telerate Inc. or such other page as
shall replace that page for the purpose of displaying offered rates of leading
banks for London interbank deposits in Dollars, the LIBOR Rate shall be the
interest per annum equal to the average (rounded upward to the nearest fifth
decimal place, if such average is not such a decimal) of the interest rates per
annum (as provided to the Administrative Agent) at which deposits in Dollars are
offered by the principal office of each of the Reference Banks in London,
England to prime banks in the London interbank market at or about 11:00 a.m.
(London time) (or as soon thereafter as practicable) two Eurodollar Business
Days before the first day of the Interest Period or Default Interest Period in
an amount substantially equal to each such Reference Bank's Loan comprising part
of such borrowing to be outstanding during such interest period and for a period
equal to (or if there is no equal, then most comparable) such interest period.
The LIBOR Rate for any interest period for each Loan comprising part of the same
borrowing shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by such agent from the Reference
Banks two Eurodollar Business Days before the first day of such interest period.
If any of the Reference Banks shall be unable or otherwise fails to provide a
rate for the purposes of determining LIBOR as hereinabove provided, then LIBOR
shall be determined on the basis of the rate or rates quoted by the remaining
Reference Banks.

     "LIBOR Reserve Period" has the meaning assigned to that term in Section
5.01(d).

                         Commercial Banks Loan Agreement



                                      -3-


     "Loans" means, collectively, the Tranche A Loans and the Tranche B Loans
provided to the Borrower pursuant to Section 2.01.

     "Majority Bank Lenders" means Lenders holding more than 50% of the sum of
(a) the aggregate amount of uncancelled and undrawn Commitments and (b) the
aggregate principal amount of outstanding Loans.

     "Margin" means (a) for the period from and including the date hereof to but
excluding the Completion Release Date, 1.20% per annum, (b) for the period from
and including the Completion Release Date to but excluding the third anniversary
of the Completion Release Date, 1.4% per annum, (c) for the period from and
including the third anniversary of the Completion Release Date to but excluding
the fifth anniversary of the Completion Release Date, 1.70% per annum, (d) for
the period from and including the fifth anniversary of the Completion Release
Date to but excluding the seventh anniversary of the Completion Release Date, 2%
per annum and (e) for the period from and including the seventh anniversary of
the Completion Release Date thereafter, 2.20% per annum.

     "Master Participation Agreement" has the meaning assigned thereto in the
recitals of this Agreement.

     "Participant" has the meaning assigned thereto in Section 11.05(c).

     "Reference Banks" means, collectively CALYON New York Branch, Mizuho
Corporate Bank Ltd., Scotia Capital and The Royal Bank of Scotland plc, or such
substitute banks designated as such by the Administrative Agent from time to
time to provide the quotations required for the determination of the LIBOR Rate
and being the principal London offices of each such bank.

     "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System of the United States (or any successor), as the same may be
modified and supplemented and in effect from time to time.

     "Regulatory Change" means, with respect to any Lender, any change after the
date of this Agreement in any law or regulations or the adoption or making after
such date of any interpretation, directive or request applying to a class of
financial institutions including such Lender of or under any law or regulations
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.

     "Substitute Basis" has the meaning assigned thereto in Section 5.02.

     "Tranche A Availability Period" means the period from the date hereof until
the Tranche A Commitment Termination Date.

     "Tranche A Commitment" means, for each Lender, the obligation of such
Lender to make Tranche A Loans to the Borrower in an aggregate principal amount
not to exceed the amount set forth opposite the name of such Lender in Appendix
A-1 of the Master Participation Agreement (as the same may be reduced at any
time or from time to time pursuant to Sections 2.01, 2.10 and

                         Commercial Banks Loan Agreement



                                      -4-


11.05 hereof and Section 2.03 of the Master Participation Agreement or pursuant
to a permitted assignment) or, in the case of an assignee of a Tranche A
Commitment, the amount specified in the Assignment and Acceptance Agreement
entered into by such assignee.

     "Tranche A Commitment Termination Date" means the earlier of (i) the
Availability Period End Date and (ii) the date on which the aggregate amount of
the Tranche A Commitments of all Lenders is fully borrowed, terminated or
reduced to zero.

     "Tranche A Loans" has the meaning assigned thereto in Section 2.01.

     "Tranche B Availability Period" means the period from the date on which the
Tranche A Loans shall have been fully drawn until the Tranche B Commitment
Termination Date.

     "Tranche B Commitment" means, for each Lender, the obligation of such
Lender to make Tranche B Loans to the Borrower in an aggregate principal amount
not to exceed the amount set forth opposite the name of such Lender in Appendix
A-1 of the Master Participation Agreement (as the same may be reduced at any
time or from time to time pursuant to Sections 2.01, 2.10 and 11.05 hereof and
Section 2.03 of the Master Participation Agreement or pursuant to a permitted
assignment) or, in the case of an assignee of a Tranche B Commitment, the amount
specified in the Assignment and Acceptance Agreement entered into by such
assignee.

     "Tranche B Commitment Termination Date" means the earlier of (i) the
Availability Period End Date and (ii) the date on which the aggregate amount of
the Tranche B Commitments of all Lenders is fully borrowed, terminated or
reduced to zero.

     "Tranche B Loans" has the meaning assigned thereto in Section 2.01.

          1.02 Other Definitions; Headings. The table of contents to this
Agreement and section headings contained herein are for convenience of reference
only and shall not affect the construction hereof.

          1.03 Reference to Master Participation Agreement. This Agreement and
the Master Participation Agreement shall be viewed as, and shall constitute, one
agreement governing the terms and conditions of the Loans; provided that the
exercise of enforcement remedies shall be made solely pursuant to and in
accordance with the Master Participation Agreement and the Master Security
Agreement. In the event of conflict between this Agreement and the Master
Participation Agreement or the Master Security Agreement, the Master
Participation Agreement or the Master Security Agreement, as the case may be,
shall prevail.

          1.04 Interpretation. Section 1.02 of the Master Participation
Agreement is hereby incorporated herein by reference as if fully set forth
herein.

                         Commercial Banks Loan Agreement



                                      -5-


          Section 2. Loans, Promissory Notes and Prepayments.

          2.01 Loans.

     (a) Subject to the terms and conditions of this Agreement and the Master
Participation Agreement, each Lender severally agrees to make loans to the
Borrower in Dollars from time to time during the Tranche A Availability Period
(the "Tranche A Loans") in an aggregate principal amount up to but not exceeding
the amount of the Tranche A Commitment of such Lender. If the full amount of the
Tranche A Commitment is not disbursed during the Tranche A Availability Period,
the amount of any undrawn portion thereof shall be automatically reduced to zero
as provided in Section 2.03 of the Master Participation Agreement.

     (b) Subject to the terms and conditions of this Agreement and the Master
Participation Agreement, each Lender severally agrees to make loans to the
Borrower in Dollars from time to time during the Tranche B Availability Period
(the "Tranche B Loans") in an aggregate principal amount up to but not exceeding
the amount of the Tranche B Commitment of such Lender. If the full amount of the
Tranche B Commitment is not disbursed during the Tranche B Availability Period,
the amount of any undrawn portion thereof shall be automatically reduced to zero
as provided in Section 2.03 of the Master Participation Agreement.

     (c) Any amounts borrowed and paid or prepaid in accordance with the terms
herein shall not be reborrowed by the Borrower.

          2.02 Borrowings. The Borrower shall give the Administrative Agent (who
shall promptly notify the Lenders) notice of each Borrowing hereunder (which
notice shall be copied to the Trustee and shall be irrevocable and effective
upon receipt) as provided in Section 4.04, such notice to be substantially in
the form of Appendix 1 to this Agreement. Except as to a Borrowing which
utilizes the unborrowed Tranche A Commitments or Tranche B Commitments, as the
case may be, in full, each Borrowing hereunder shall be in a minimum amount of
US$2,500,000 and, if greater, in an amount which is an integral multiple of
US$1,000,000.

     Not later than 10:00 a.m. New York time on the date specified in each
notice for borrowing hereunder, each Lender shall make available the aggregate
amount of the Loans to be made by it on such date (as determined in accordance
with Section 4.02) to the Administrative Agent, at account number
01-88179-3701-00 (Attn: Loan Settlement, Ref: Cerro Verde) maintained by the
Administrative Agent with CALYON New York Branch (ABA# 026-008-073) in
immediately available funds. The amount so received by the Administrative Agent
shall, subject to the terms and conditions of this Agreement and the Master
Participation Agreement, be made available to the Borrower by 11:00 a.m. New
York time on such date, by depositing such amount, in immediately available
funds, in the Onshore Dollars Account.

          2.03 Agent and Other Fees. The Borrower shall pay to the
Administrative Agent, for its own account, the Administrative Agent's fee, and
to the Lenders (as Lead Arrangers) the upfront fees, each in the amounts set
forth in the fee letter dated July 28, 2005 between the Lenders and the Borrower
on the dates set forth in such fee letter.

                         Commercial Banks Loan Agreement



                                      -6-


          2.04 Commitment Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the daily average
unused amount of such Lender's Tranche A Commitment and Tranche B Commitment,
for the period from and including the date hereof to but excluding the final day
of the Tranche A Availability Period and the Tranche B Availability Period, as
the case may be, at a rate per annum equal to 0.375%. Accrued commitment fees
shall be payable quarterly in arrears on each Interest Payment Date, on each
date falling three calendar months after each Interest Payment Date and, in the
case of the last installment of commitment fees payable hereunder, on the last
day of the Tranche A Availability Period and the Tranche B Availability Period,
as the case may be.

          2.05 Lending Offices. The Loans made by each Lender shall be made and
maintained at such Lender's Applicable Lending Office.

          2.06 Several Obligations; Remedies Independent. The amounts payable by
the Borrower at any time hereunder and under the Promissory Notes to each Lender
shall be separate and independent obligations of the Borrower and each Lender
shall be entitled, in accordance with the Master Participation Agreement, to
protect and enforce its rights arising out of this Agreement and the Promissory
Notes held by it, and, except as otherwise provided in the Master Participation
Agreement, it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.

          2.07 Promissory Notes. As additional evidence of the Borrower's
obligation to pay the principal of the Loans as provided herein, the Borrower
shall execute and deliver to the Administrative Agent on behalf of each Lender,
Promissory Notes issued by the Borrower, in substantially the form set forth in
Exhibit A hereto, with a dual column translation into Spanish to be included
therein, in accordance with Section 2.08 of the Master Participation Agreement.

          2.08 Voluntary Prepayments of Loans. The Borrower shall have the right
to prepay Loans, either in whole or in part, in accordance with Section 3.05 of
the Master Participation Agreement, at any time or from time to time. Each
prepayment of Loans under this Section 2.08 shall be accompanied by the
prepayment compensation (if any) required under Section 3.11 of the Master
Participation Agreement. Any prepayment made by the Borrower pursuant to
Sections 2.08, 2.09 and 2.11 shall be made together with all accrued but unpaid
interest on amounts prepaid and all other amounts (including any amounts due
pursuant to Section 5) then due from the Borrower hereunder. Partial prepayment
shall be applied to the Loans in accordance with Section 3.08 of the Master
Participation Agreement.

          2.09 Pro Rata Prepayments. The extent to which prepayments by the
Borrower to any Senior Lender in respect of the Senior Loan Obligations must be
a Pro Rata Payment shall be determined in accordance with Section 3.04 of the
Master Participation Agreement. A Lender may waive its right to receive any such
prepayment without prejudice to its right to receive any subsequent prepayment.
Each prepayment of Loans shall be accompanied by the prepayment compensation (if
any) required under Section 3.11 of the Master Participation Agreement and shall
be applied in accordance with the Master Participation Agreement. Amounts
prepaid pursuant to this Section 2.09 may not be reborrowed by the Borrower.

                         Commercial Banks Loan Agreement



                                      -7-


          2.10 Change in Commitments.

     (a) Commitments Generally. The Borrower shall have the right to terminate
or reduce the aggregate unused amount of the Commitment subject to and in
accordance with Section 2.03 of the Master Participation Agreement.

     (b) Tranche B Loan Commitments. On the date on which the Borrower issues
Peruvian Bonds under the Peruvian Bonds Program, the Borrower shall reduce the
aggregate unutilized amount of Tranche B Commitments outstanding on such date in
an amount equal to the lesser of: (i) the aggregate amount of the Peruvian Bonds
issuance and (ii) the aggregate unutilized amount of Tranche B Commitments
outstanding on such date. To the extent that the aggregate proceeds of issuance
of the Peruvian Bonds on such date exceeds the aggregate unutilized amount of
Tranche B Commitments outstanding on such date, the Borrower shall prepay the
Tranche B Loans outstanding (together with interest accrued and payable thereon)
in an amount equal to the difference between (x) the aggregate proceeds of
issuance of the Peruvian Bonds on such date and (y) the aggregate unutilized
amount of Tranche B Commitments outstanding on such date.

     (c) No Reinstatement. Any portion of the Commitments once terminated or
reduced may not be reinstated.

          2.11 Mandatory Prepayments.

     (a) Loans. The Borrower shall be obligated to prepay the Loans pursuant to
Section 3.06 of the Master Participation Agreement.

     (b) Peruvian Bonds Program. On the date on which the Borrower issues
Peruvian Bonds under the Peruvian Bonds Program, the Borrower shall prepay the
Tranche B Loans in the principal amount required under Section 2.10(b).

          Section 3. Payments of Principal and Interest.

          3.01 Repayment of Loans. The Borrower hereby promises to pay to the
Administrative Agent, for the account of the Lenders, the principal amount of
the Loans in consecutive semi-annual installments payable commencing on the
first Payment Date and on each subsequent Payment Date thereafter, each such
installment to be in an aggregate principal amount computed in accordance with
the Amortization Schedule set forth in Exhibit B (which Amortization Schedule
may be revised by the Administrative Agent from time to time to take into
account (a) prepayments of the Loans pursuant to the terms hereof and the Master
Participation Agreement and (b) the actual first Payment Date); provided,
however, that the amount of the final payment of principal of the Loans shall in
any event be equal to the remaining unpaid principal amount of the Loans.

          3.02 Interest.

     (a) The Borrower hereby promises to pay to the Administrative Agent, for
the account of each Lender, interest on the unpaid principal amount of the Loan
from such Lender for the period from and including the date of such Loan to but
excluding the date such Loan shall be paid in full, at a rate per annum equal
to, for each Interest Period, the LIBOR Rate for such Loan for such Interest
Period plus the applicable Margin.

                         Commercial Banks Loan Agreement



                                      -8-


     (b) The Borrower agrees that during the Continuance of any MPA Event of
Default under Section 9.01 of the Master Participation Agreement (other than an
MPA Event of Default under Section 9.01(a) of the Master Participation Agreement
relating to this Agreement), the interest rate per annum which the Borrower is
obligated to pay in respect of each Interest Period pursuant to sub-Section (a)
above shall be increased by adding to such interest rate the Default Margin.

     (c) Accrued interest on each Loan shall be payable on each Interest Payment
Date and upon any prepayment of a Loan (on the prepaid amount). Promptly after
the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to each of the
Lenders and the Borrower.

     (d) If any installment of principal of any Loan or any other amount
(including interest on a Loan) payable hereunder is not paid in full when due
(whether at the stated due date, by acceleration, by mandatory prepayment or
otherwise), the Borrower hereby agrees to pay from time to time upon demand
interest on the amount past due and unpaid for such period of time within each
related Default Interest Period during which such amount shall remain due and
unpaid, at a rate per annum equal to (i) in respect of principal, the Default
Margin plus the greater of (A) the rate of interest payable in respect of such
principal pursuant to Section 3.02(a) (or, if applicable, Section 5.02) in
effect immediately prior to such default in payment and (B) the sum of the LIBOR
Rate for such Default Interest Period plus the Margin and (ii) in respect of
such other amounts, the Default Margin plus the LIBOR Rate for such Default
Interest Period plus the Margin.

          Section 4. Payments; Pro Rata Treatment; Computations; Etc.

          4.01 Payments.

     (a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement and the Promissory Notes (including fees and indemnities) shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent for the account of the Lenders at
account number 01-88179-3701-00 (Attn: Loan Settlement, Ref: Cerro Verde)
maintained by the Administrative Agent with CALYON New York Branch
(ABA#026-008-073), not later than 11:00 a.m. New York time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).

     (b) Each payment received by the Administrative Agent under this Agreement
or any Promissory Note for the account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for the account of such Lender's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.

     (c) If the due date of any payment under this Agreement or any Promissory
Note would otherwise fall on a day that is not a Business Day, such date shall
be extended to the next succeeding Business Day, and interest shall be payable
for any principal so extended for the

                         Commercial Banks Loan Agreement



                                      -9-


period of such extension; provided, however, that if such next succeeding
Business Day falls in the following month, such date shall be the Business Day
immediately preceding such date.

          4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein or in the Master Participation Agreement, the Loans shall be disbursed by
the Lenders pro rata in accordance with the maximum respective principal amounts
of each Lender's Commitment. The extent to which payments by the Borrower to any
Senior Facility Lender in respect of the Senior Loan Obligations must be a Pro
Rata Payment shall be determined in accordance with Section 3.04 of the Master
Participation Agreement.

          4.03 Computations. Interest on Loans and commitment fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest and commitment fees are payable.

          4.04 Certain Notices.

     (a) Notices by the Borrower to the Administrative Agent of borrowings,
termination or reduction of Commitments and voluntary prepayments of Loans shall
be irrevocable and shall be effective only if received by the Administrative
Agent not later than 11:00 a.m. New York time on the number of days, as the case
may be, prior to the date of the relevant borrowing, termination or reduction of
Commitments and voluntary prepayments of Loans, as the case may be, specified
below:



Type of Notice                        Required Prior Notice
- -----------------------------------   ----------------------------------
                                   
Borrowing of Loans;                   15 Business Days for Base Advances
Termination or Reduction of           and 10 New York Business Days for
Commitments under Section 2.10; and   Stand-by Advances
Mandatory Prepayments of Loans
Voluntary Prepayments of Loans        60 days


     (b) If received later than 11:00 a.m. New York time on such date, such
notice shall be effective on the next succeeding Business Day unless the
Borrower is notified by the Administrative Agent that such notice shall be
effective on the original Business Day.

     (c) Each notice of borrowing or voluntary prepayment shall specify (i) the
Tranche A Loans and/or Tranche B Loans to be borrowed or prepaid, (ii) the
aggregate amount (subject to Sections 2.02, 2.08 and 2.09) of each Tranche A
Loan and/or Tranche B Loan to be borrowed and (iii) the date of borrowing or
voluntary prepayment (which shall be a Business Day). Each such notice of
termination or reduction shall specify the amount of the Commitments to be
terminated or reduced. The Administrative Agent shall promptly notify the
Lenders of the contents of each such notice (and in any event by the Business
Day after the Administrative Agent's receipt thereof).

                         Commercial Banks Loan Agreement



                                      -10-


          4.05 Non-Receipt of Funds by the Administrative Agent.

     (a) Without limiting Section 2.07 of the Master Participation Agreement,
unless the Administrative Agent shall have been notified by a Lender or the
Borrower (the "Payor") prior to the date on which the Payor is to make payment
to the Administrative Agent of (in the case of a Lender) the proceeds of a Loan
to be made by such Lender hereunder or (in the case of the Borrower) a payment
to the Administrative Agent for account of one or more of the Lenders hereunder
(such payment being herein called the "Required Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to that indicated by the Administrative Agent
in a notice to such recipient(s) as the Administrative Agent's cost of funds for
such period (determined by the Administrative Agent in its reasonable
discretion, which determination shall be conclusive) and, if such recipient(s)
shall fail promptly to make such payment, the Administrative Agent shall be
entitled to recover such amount, on demand, from the Payor, together with
interest as aforesaid.

     (b) If neither the recipient(s) nor the Payor shall return the Required
Payment to the Administrative Agent within three Business Days of the Advance
Date, then, retroactively to the Advance Date, the Payor and the recipient(s)
shall each be obligated to pay interest on the Required Payment as follows:

               (i) if the Required Payment shall represent a payment to be made
     by the Borrower, as the case may be, to the Lenders, the Payor(s) and the
     recipient(s) shall each be obligated retroactively to the Advance Date to
     pay interest in respect of the Required Payment at the rate of interest
     provided for pursuant to Section 3.02 (and, in case the recipient(s) shall
     return the Required Payment to the Administrative Agent, without limiting
     the obligation of any such Payor(s) under Section 3.02 to pay interest to
     such recipient(s) in respect of the Required Payment); and

               (ii) if the Required Payment shall represent proceeds of a Loan
     to be made by the Lenders to the Borrower, the Payor and the Borrower shall
     each be obligated retroactively to the Advance Date to pay interest in
     respect of the Required Payment at the rate of interest provided for such
     Required Payment pursuant to Section 3.02 (and, in case the Borrower shall
     return such Required Payment to the Administrative Agent, without limiting
     any claim the Borrower may have against the Payor in respect of the
     Required Payment).

     (c) In the event that the Payor and the recipient(s) both return the
Required Payment to the Administrative Agent together with interest thereon as
required hereby, the

                        Commercial Banks Loan Agreement



                                      -11-


Administrative Agent shall promptly pay to the recipient(s) such Required
Payment together with such interest paid by the recipient(s).

     (d) The Administrative Agent shall promptly notify each Lender of any
receipt of notice by the Administrative Agent from the Borrower that the
Borrower does not intend to make the Required Payment to the Administrative
Agent for account of one or more of the Lenders.

          Section 5. Yield Protection, Etc.
          5.01 Additional Costs.

     (a) The Borrower shall pay directly to each Lender from time to time such
amounts as are necessary to compensate such Lender for any increase in costs
attributable to its making or maintaining of any Loans to the Borrower or its
obligation to make any Loans hereunder to the Borrower, or any reduction in any
amount receivable by such Lender hereunder in respect of any of such Loans or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case, from those costs and
amounts receivable existing on the date hereof, resulting from any Regulatory
Change that:

          (i) imposes or modifies any reserve, special deposit or similar
     requirements, including any application of the Regulation D requirement,
     relating to any extensions of credit or other assets of, or any deposits
     with or other liabilities of, such Lender (including any of such Loans or
     any deposits referred to in the definition of "LIBOR Rate" in Section
     1.01), or any commitment of such Lender (including the Commitment of such
     Lender hereunder); or

          (ii) imposes or any Lender or the London interbank market any other
     condition affecting this Agreement or Loans made by such Lender.

     (b) Without limiting the effect of the foregoing provisions of this Section
5.01 (but without duplication), the Borrower shall pay directly to each Lender
from time to time on request such amounts as such Lender may determine in good
faith to be necessary to compensate such Lender (or, without duplication, the
bank holding company of which such Lender is a subsidiary) for any increase in
costs that it in good faith determines is attributable to the maintenance by
such Lender (or any Applicable Lending Office or such bank holding company),
pursuant to any law or regulation or any interpretation, directive, guideline or
request (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) of or by any court or governmental,
monetary, fiscal or other authority (i) following any Regulatory Change or (ii)
implementing any risk-based capital guideline or other requirement (whether or
not having the force of law and whether or not the failure to comply therewith
would be unlawful) issued after the date of this Agreement by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord, of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive, guideline or request).
For purposes of this Section 5.01(b), "Basle Accord" shall mean the proposals
for risk-based capital framework described by the Basle Committee on Banking

                        Commercial Banks Loan Agreement



                                      -12-


Regulations and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards" dated July 1988, as
amended, modified and supplemented and in effect from time to time or any
replacement thereof.

     (c) Section 5.01 does not apply, and no Lender shall be entitled to make
any claim under Section 5.01, to the extent any Additional Cost is attributable
directly or indirectly to the application of, compliance with or implementation
of any part or "pillar" of the International Convergence of Capital Measurement
Standards: a Revised Framework, published by the Basle Committee on Banking
Supervision in June 2004 (as in effect on the date hereof), or any
implementation or interpretation thereof, whether by any law or regulation, or
otherwise, or to any change by a Lender from one method of calculating capital
adequacy to another, insofar as such Additional Costs are directly or indirectly
attributable to credit-related events or circumstances that are specific to a
Lender and not solely to general regulatory guidelines or requirements imposed
on the commercial banking sector generally.

     (d) Each Lender shall notify the Borrower of any event occurring after the
date of this Agreement entitling such Lender to compensation under clause (a) or
(b) of this Section 5.01 as promptly as practicable, but in any event, within
six months after such Lender obtains actual knowledge thereof; provided, that if
such Lender fails to give such notice within six months after it obtains actual
knowledge of such an event, such Lender shall, with respect to compensation
payable pursuant to this Section 5.01 in respect of any Additional Costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date six months prior to the date that
such Lender does give such notice. Each Lender shall designate a different
Applicable Lending Office, if possible, for the Loans of such Lender affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Lender shall furnish to the Borrower a certificate setting forth
in reasonable detail the basis and amount of each request by such Lender for
compensation under clause (a) or (b) of this Section 5.01. The payment of any
such amount by the Borrower shall not preclude the Borrower from contesting such
calculation.

     (e) In the event that any Lender shall determine at any time that it is
required to maintain reserves in respect of Eurocurrency Liabilities during any
period during which the principal amount of any Loan is outstanding (each such
period, for such Lender, a "LIBOR Reserve Period"), but only in respect of any
period during which any reserve shall actually be maintained by such Lender for
the Loans as a result of a reserve requirement applicable to it under Regulation
D in connection with Eurocurrency Liabilities, then such Lender shall promptly
give notice to the Borrower and the Administrative Agent of such determination,
and the Borrower shall directly pay to such Lender additional interest on the
unpaid principal amount of such Loan during such LIBOR Reserve Period at a rate
per annum which shall, during each monthly period applicable to such Loan, be
the amount by which (i) the LIBOR Rate for such monthly period divided (and
rounded upward, if necessary, to the next whole multiple of 1/100 of 1%) by a
percentage equal to 100% minus the then-stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to such Lender in respect of
Eurocurrency Liabilities exceeds (ii) the LIBOR Rate for such monthly period.
Any Lender so requesting compensation shall furnish along with such

                        Commercial Banks Loan Agreement



                                      -13-


notice a certificate setting forth in reasonable detail the cost actually
incurred to maintain such reserves and the basis for the determination of such
amount. Additional interest payable pursuant to the immediately preceding
sentence shall be paid by the Borrower at the time that it is otherwise required
to pay interest in respect of such Loan or, if later demanded by any Lender,
promptly on the next Payment Date for any principal of the Loans after such
demand. Each Lender agrees that, if it gives notice to the Borrower and the
Administrative Agent of the existence of a LIBOR Reserve Period, it shall
promptly notify the Borrower and the Administrative Agent of any termination
thereof, at which time the Borrower shall cease to be obligated to pay
additional interest to such Lender pursuant to the first sentence of this
paragraph until such time, if any, as a subsequent LIBOR Reserve Period shall
occur.

     (f) Any determination or allocation made by any Lender pursuant to this
Section 5.01 shall be made by such Lender in good faith and, absent error, will
be conclusive, so long as such determination is applied to the Borrower in a
non-discriminatory manner as compared to similarly situated borrowers.

          5.02 Alternate Interest Rate. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Rate for any
Interest Period or Default Interest Period:

          (a) the Administrative Agent determines, which determination shall be
     conclusive absent manifest error, that quotations of interest rates for the
     relevant deposits referred to in the definition of "LIBOR Rate" in Section
     1.01 hereof are not being provided in the relevant amounts or for the
     relevant maturities for purposes of determining rates of interest as
     provided herein; or

          (b) the Majority Bank Lenders notify the Administrative Agent that (i)
     the relevant rates of interest referred to in the definition of "LIBOR
     Rate" in Section 1.01 hereof upon which the rate of interest for such
     Interest Period or Default Interest Period is to be determined will not
     adequately reflect the cost to such Lenders of making or maintaining Loans,
     or maintaining any other amount hereunder not paid when due, for such
     Interest Period or Default Interest Period or (ii) deposits in Dollars in
     the London interbank market are not available to Lenders in the ordinary
     course of business in sufficient amounts to make and/or maintain their
     Loans,

then the Administrative Agent shall notify the Borrower thereof and the
following provisions shall apply:

          (A) During the thirty-day period following the date of any such notice
     (the "Negotiation Period"), the Administrative Agent (on behalf of the
     Lenders) and the Borrower will negotiate in good faith for the purpose of
     agreeing upon an alternative, mutually acceptable basis (the "Substitute
     Basis") for determining the rate of interest to be applicable to Loans, and
     any other amounts hereunder not paid when due, from time to time and if, at
     the expiry of the Negotiation Period, the Administrative Agent (on behalf
     of the Lenders) and the Borrower have agreed upon a Substitute Basis and
     any required governmental approvals therefor have been obtained, the
     Substitute Basis shall take effect

                        Commercial Banks Loan Agreement



                                      -14-


     from such date (including such retroactive date) as the Administrative
     Agent (on behalf of the Lenders) and the Borrower may in such circumstance
     agree.

          (B) If at the expiry of the Negotiation Period, a Substitute Basis
     shall not have been agreed upon or any required governmental approvals
     therefor shall not have been obtained, the Administrative Agent (with the
     consent of the Majority Bank Lenders) shall notify the Borrower of the cost
     to the Lenders (as reasonably determined by them) of funding and
     maintaining the outstanding affected Loans, and any other amounts hereunder
     not paid when due for such Interest Period or Default Interest Period and
     the interest payable to the Lenders on Loans and such other amounts not
     paid when due to which such Interest Period or Default Interest Period
     applies shall be interest at a rate per annum equal to the cost of funding
     and maintaining such Loans or such other amounts as so notified by the
     Administrative Agent plus the applicable Margin plus, during any Interest
     Period or any Default Interest Period, upon the occurrence and during the
     Continuance of any MPA Event of Default under Section 9.01 of the Master
     Participation Agreement (other than any Event of Default under Section
     9.01(a) thereof relating to this Agreement), the Default Margin.

The procedures specified in (A) and (B) above shall apply to each relevant
period succeeding the first such period to which they were applied unless and
until the Administrative Agent notifies the Borrower that the condition referred
to in clause (a) of this Section 5.02 no longer exists or the Administrative
Agent (at the request of the Majority Bank Lenders) notifies the Borrower that
the condition referred to in clause (b) of this Section 5.02 no longer exists
(which notice the Lenders agree to give or cause to be given promptly following
the cessation of such condition), whereupon interest on Loans shall again be
determined in accordance with the provisions of Section 3.02, effective
commencing on the third Business Day after the date of such notice.

          5.03 Compensation. Upon request of the Administrative Agent on behalf
of any Lender, the Borrower shall pay to the Administrative Agent for the
account of such Lender such amount or amounts as shall be sufficient to
indemnify it for any Funding Losses in accordance with Section 3.11 of the
Master Participation Agreement.

          5.04 Mitigation. If an event or circumstance occurs that would entitle
a Lender to exercise any of the rights or benefits afforded by this Section 5,
such Lender, promptly upon becoming aware of the same, shall take all steps as
may be reasonably available to eliminate or mitigate the effects of such event
or circumstance; provided, however, that such Lender shall not be under any
obligation to take any step that, in its sole discretion, would (a) result in
its incurring additional material costs or taxes or (b) otherwise be
disadvantageous to such Lender; provided, further, that the Borrower shall
reimburse any such Lender for all reasonable and documented costs and taxes
incurred pursuant to this Section 5.04.

          5.05 Applicable Lending Offices. A Lender may change its Applicable
Lending Office for any Loan by written notice to the Administrative Agent, the
Trustee and the Borrower and such notice shall be effective for purposes of this
Agreement as of the date specified therein.

                        Commercial Banks Loan Agreement



                                      -15-


          Section 6. Conditions Precedent.

          6.01 Initial Loans. The obligation of each Lender to make its initial
Loan hereunder is subject to Section 3.10 of the Master Participation Agreement
and the satisfaction (or waiver by each Lender) of any conditions set forth in
Section 5.01 of the Master Participation Agreement.

          6.02 Additional Conditions. The obligation of each Lender to make any
Loan hereunder (excluding its initial Tranche A Loan which is subject to
conditions described in Section 6.01 above) is subject to the satisfaction (or
waiver by it) of the following conditions:

          (a) Satisfaction of Common Conditions Precedent. The common conditions
     precedent set forth in Section 5.02 of the Master Participation Agreement
     shall have been satisfied (or waived as provided therein); and

          (b) Suspension. The obligation of any Senior Facility Lender shall not
     have been deemed to be suspended pursuant to Section 3.10 of the Master
     Participation Agreement.

          Section 7. Representations and Warranties. The Borrower has given
certain representations and warranties for the benefit of the Lenders in Article
VI of the Master Participation Agreement. The rights of the Lenders in respect
of such representations and warranties are set forth in the Master Participation
Agreement and the Master Security Agreement.

          Section 8. Covenants. The Borrower has given covenants and agreements
set forth in Article VII of the Master Participation Agreement. The rights of
the Lenders in respect of such covenants and agreement are set forth in the
Master Participation Agreement and the Master Security Agreement.

          Section 9. Events of Default; Remedies.

          9.01 Events of Default. Subject to Section 9.02, each of the MPA
Events of Default set forth in Section 9.01 of the Master Participation
Agreement is hereby incorporated by reference in this Agreement as if fully set
forth herein, in accordance with their terms, unless waived in accordance with
the Master Participation Agreement.

          9.02 Remedies. Upon the occurrence and Continuance of an MPA Event of
Default as provided in Section 9.01 hereof, the Lenders shall have each of the
rights and remedies provided in the Master Participation Agreement and the
Master Security Agreement exercisable only pursuant to and in accordance with
the terms thereof.

                        Commercial Banks Loan Agreement



                                      -16-


          Section 10. The Administrative Agent.

          10.01 Appointment, Powers and Immunities.

     (a) Each Lender hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent hereunder, with such rights,
authorities, discretions and powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto, and each Lender authorizes and
instructs the Administrative Agent to execute and deliver each of the Master
Participation Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement and any other Financing Document to which such Lender and/or the
Administrative Agent is a party and each such Lender agrees to be bound by the
terms and conditions of each such agreement as if it had executed and delivered
such agreement for and in its own name.

     (b) Each Lender hereby agrees and acknowledges that the Administrative
Agent shall act for and on behalf of the Lenders hereunder for purposes of each
of the Master Participation Agreement, the Completion Guarantee and the Transfer
Restrictions Agreement, and each Lender hereby authorizes such action by the
Administrative Agent on its behalf in accordance with its appointment hereunder.
Notwithstanding the foregoing, the Administrative Agent shall promptly upon
request of any Lender deliver any request, notice or communication permitted to
be given by any Senior Facility Lender under or pursuant to the Master
Participation Agreement, the Completion Guarantee and the Transfer Restrictions
Agreement.

     (c) The Administrative Agent (which term as used in this sentence and in
Section 10.05 shall include reference to its Affiliates and its Affiliates'
officers, directors, employees and agents) shall not: (i) have any duties or
responsibilities except those expressly set forth in this Agreement, or by
reason of this Agreement be a trustee for any Lender, (ii) be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Promissory Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person to perform any of
its obligations hereunder or thereunder, (iii) be required to initiate or
conduct any litigation or collection proceedings hereunder or (iv) be
responsible for any action taken or omitted to be taken by it hereunder or under
any other document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful misconduct.

     (d) The Administrative Agent may employ agents and attorneys-in-fact, and
the Administrative Agent shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
The Administrative Agent may deem and treat the payee of any Promissory Note as
the holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent.

     (e) Any bank serving as Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from,

                        Commercial Banks Loan Agreement



                                      -17-


lend money to and generally engage in any kind of business with the Borrower or
Affiliate thereof as if it were not the Administrative Agent hereunder.

          10.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any certification, notice, request, consent, statement, instrument, document or
other communication (including any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement, the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Majority Bank Lenders, and such instructions of the
Majority Bank Lenders and any action taken or failure to act pursuant thereto
shall be binding on all of the Lenders. The Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (a) any statement,
warranty or representation made in or in connection with this Agreement, any
other Financing Document or the Sulfide Project, (b) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (c) the performance or observance of any of the covenants, agreements
or other terms or conditions set forth herein, (d) the validity, enforceability,
effectiveness or genuineness of this Agreement or any other agreement,
instrument or document, or (e) the satisfaction of any condition set forth in
Section 6 or elsewhere herein, other than to confirm receipt of items required
to be delivered to the Administrative Agent.

          10.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of an MPA Default (other than the
non-payment of principal of or interest on Loans or of commitment fees) unless
the Administrative Agent has received notice from a Lender or the Borrower
specifying such MPA Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of any MPA Default, the Administrative Agent shall give prompt
notice thereof to the Lenders and the Borrower (and shall give each Lender
prompt notice of each such non-payment).

          10.04 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.21 of the
Master Participation Agreement, but without limiting the obligations of the
Borrower under said Section 12.21 of the Master Participation Agreement) ratably
in accordance with the aggregate principal amount of the Loans held by the
Lenders (or, if no Loans are at the time outstanding, ratably in accordance with
their respective Commitments), for any and all liabilities, obligations, losses,
claims, damages, penalties, actions, judgments, settlements, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against (including by any Lender) the Administrative
Agent arising out of or by reason of any investigation in or in any way relating
to or arising out of this Agreement or any other documents contemplated by or
referred to herein or the transactions contemplated hereby (including, without
limitation, the costs and expenses that the Borrower is obligated to pay under
Section 12.21 of the Master Participation Agreement but excluding, unless an MPA
Event of Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of the Administrative Agent's agency duties
hereunder) or the enforcement of any of the terms hereof

                        Commercial Banks Loan Agreement



                                      -18-


or of any such other documents; provided, however, that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Administrative Agent.

          10.05 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and its respective Affiliates and its own decision to enter into this
Agreement and that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any other
document referred to or provided for herein or to inspect the properties or
books of the Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder (as to which the Administrative Agent only shall
have the duty to forward what it has received), the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any of its respective Affiliates that may come into its possession.

          10.06 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.04 against any and all liability and expense that
may be incurred by the Administrative Agent by reason of taking or continuing to
take any such action.

          10.07 Resignation or Removal of Administrative Agent. The
Administrative Agent, subject to the appointment of a successor as provided in
this Section 10.07, may resign at any time by notifying the Lenders and the
Borrower. The Administrative Agent may be removed as agent hereunder upon 30
days' notice by an instrument in writing signed by the Majority Bank Lenders and
the Borrower. Upon any such resignation or removal, the Majority Bank Lenders
shall have the right, with the approval of the Borrower not to be unreasonably
withheld, to appoint a successor Administrative Agent. No removal or resignation
of a Administrative Agent or appointment of a successor Administrative Agent
shall be effective until (a) the appointment of a successor is accepted and (b)
solely in the case of a removal all indemnity and compensation required under
the Financing Documents have been paid or provided for. If no successor shall
have been so appointed by Majority Bank Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent with the approval of the
Borrower not to be unreasonably withheld which shall be a bank with an office in
New York, New York or London, or an affiliate of any such bank. Upon the
acceptance of its appointment as the Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent and the retiring Administrative Agent shall
be discharged from its duties and obligations hereunder. The

                        Commercial Banks Loan Agreement



                                      -19-


fees payable by the Borrower to a successor Administrative Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After a Administrative Agent's resignation
hereunder, the provisions of this Section 10 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Administrative Agent.

          10.08 Voting. Except as otherwise specified in the Master
Participation Agreement, in each instance that the Lenders are required to vote
hereunder, a vote shall be taken among the Lenders within the period of time
specified by the Administrative Agent.

          10.09 Administrative Agent Notices. The Administrative Agent agrees to
promptly furnish to each Lender a copy of each written communication (including
financial information and project reports) received by it from the Parent
Companies, the Borrower or the Trustee expressly relating to, and any amendment
or waiver of any of the provisions of, this Agreement, the Master Participation
Agreement, the Transfer Restrictions Agreement, the Security Documents, the
other Financing Documents, the Project Documents and the transactions
contemplated hereby and thereby, or from any Senior Lender pursuant to Section
10.02 of the Master Participation Agreement. In addition, the Administrative
Agent agrees to promptly advise each Lender of any material action taken, or any
action proposed by the Lenders to be taken that is not taken, by the Senior
Lenders at any meeting of Senior Lenders.

          Section 11. Miscellaneous.

          11.01 Waiver. Except as expressly provided herein, no failure on the
part of the Administrative Agent or any Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or any Promissory Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or any Promissory Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

          11.02 Notices.

     (a) Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be (i) in writing (including
telecopier) and (ii) telecopied or sent by overnight courier (if for inland
delivery) or international courier (if for overseas delivery) to a party hereto
at its address and contact number specified in the signature pages hereto, or at
such other address and contact number as is designated by such party in a
written notice to the other parties hereto.

     (b) All such notices and communications shall be effective (i) if sent by
telecopier, when sent (on receipt of written or oral confirmation of receipt)
and (ii) if sent by courier, (A) one day after deposit with an overnight courier
if for inland delivery and (B) three days after deposit with an international
courier if for overseas delivery. Notice of any address or facsimile number
change shall be effective only upon receipt.

     (c) The Borrower agrees that the Administrative Agent may make any notices
and communications received hereunder (the "Communications") available to the
Lenders in an

                        Commercial Banks Loan Agreement



                                      -20-


electronic/soft medium by posting the Communications on Intralinks or a
substantially similar electronic transmission system (the "Platform"). THE
PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE". THE AGENT PARTIES (AS DEFINED
BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE
ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR
OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR
STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN
CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE
ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, THE "AGENT PARTIES") HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF SUCH
CREDIT PARTY'S OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS
THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS
FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

     (d) Each Lender agrees that notice to it (as provided in the next sentence)
specifying that the Communications have been posted to the Platform shall
constitute effective delivery of the Communications to such Lender for purposes
of the Financing Documents. Each Lender agrees (i) to provide to the
Administrative Agent in writing (including by electronic communication),
promptly after the date of this Agreement, an e-mail address to which the
foregoing notice may be sent by electronic transmission and (ii) that the
foregoing notice may be sent to such e-mail address.

     (e) Nothing herein shall prejudice the right of the Administrative Agent or
any Lender to give any notice or other communication pursuant to any Financing
Document in any other manner specified in such Financing Document.

          11.03 Amendments, Etc.

     (a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) Borrower, (ii) the Administrative Agent, acting in accordance with clause
(b) of this Section 11.03 and Section 10.01 of the Master Participation
Agreement and (iii) with respect to any amendment, supplement or modification
that modifies any provision of this Agreement in a manner that adversely affects
any rights of the Administrative Agent hereunder or enlarges its duties
hereunder, the Administrative Agent.

                        Commercial Banks Loan Agreement



                                      -21-


     (b) No amendment, modification, supplement or waiver of any provision of
this Agreement shall, unless by an instrument signed or consented to by all of
the Lenders: (i) increase, or extend the term of the Tranche A Commitments or
Tranche B Commitments, or extend the term or waive any requirement for the
reduction or termination of the Tranche A Commitments or Tranche B Commitments,
(ii) extend the date fixed for the payment of principal of or interest on any
Loan or any commitment or other fee hereunder or under the Promissory Notes,
(iii) reduce the amount of any such payment of principal, (iv) reduce the rate
at which interest is payable thereon or any commitment or other fee is payable
hereunder, or alter the basis for calculating any other obligations, (v) alter
the rights or obligations of the Borrower under Section 2.08, 2.09, 2.10 or
2.11, (vi) alter the terms of this Section 11.03 or Section 4.02, (vii) modify
the definition of the term "Majority Bank Lenders" or modify in any other manner
the number or percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof or (viii) waive any
of the conditions precedent set forth in Section 6.

     (c) No waiver by any party hereto of any of its rights, powers and
privileges under this Agreement shall be effective other than pursuant to a
written instrument executed by the Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Facility
Lenders can be executed by the Administrative Agent acting in accordance with
Section 10.01 of the Master Participation Agreement.

     (d) Any modification, supplement or waiver shall be for such period and
shall be subject to such conditions as shall be specified in the instrument
effecting the same and any such waiver shall be effective only in the specific
instance and for the purpose for which given.

          11.04 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

          11.05 Assignments and Participations.

     (a) The Borrower may not assign any of its rights or obligations hereunder
or under the Promissory Notes without the prior written consent of all of the
Lenders and the Administrative Agent (and any attempted assignment or transfer
by the Borrower without such consent shall be null and void).

     (b) Each of the Lenders may assign any and all of its rights and
obligations hereunder only pursuant to Section 12.13 of the Master Participation
Agreement. Upon execution and delivery by the assignee to the Borrower and the
Administrative Agent and the Administrative Agent of an assignment and
acceptance agreement substantially in the form of Exhibit C hereto (such
agreement, an "Assignment and Acceptance"), pursuant to which such assignee
agrees to become a "Lender" hereunder (if not already a Lender) having the
Commitment and Loans specified in such instrument, the assignee shall have, to
the extent of such assignment, the rights, obligations and benefits of a Lender
hereunder holding the Commitment and Loans (or portion(s) thereof) assigned to
it (in addition to the Commitment and Loans, if any, theretofore held by such
assignee) and the assigning Lender shall, to the extent of such assignment, be
released from the Commitment and Loans (or portion(s) thereof) so assigned (and,
in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this

                        Commercial Banks Loan Agreement



                                      -22-


Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to, for periods during which it held the Loans, the benefits of
Sections 5.01 and 11.06 hereof and Sections 3.09 and 12.21 of the Master
Participation Agreement).

     (c) Each Lender may sell or agree to sell to one or more commercial banks
or lending institutions (a "Participant") a participation in all or any part of
its Loans, its Promissory Notes or in its Commitments; provided that no
Participant shall have any rights or benefits under this Agreement, any
Promissory Note or any other Financing Documents. All amounts payable by the
Borrower to any Lender under Section 5 in respect of Loans held by it, and its
Commitment, shall be determined as if such Lender had not sold or agreed to sell
any participations in such Loans and Commitment, and as if such Lender were
funding each of such Loan and Commitment in the same way that it is funding the
portion of such Loan and Commitment in which no participations have been sold.

     (d) A Lender or the Administrative Agent, as the case may be, may furnish
any information concerning the Borrower in the possession of such Lender or the
Administrative Agent from time to time to assignees and Participants (including
prospective assignees and Participants) subject to the confidentiality
provisions set forth in Section 12.10 of the Master Participation Agreement.

          11.06 Survival/Reinstatement. The obligations of the Borrower under
Section 5 and the obligations of the Lenders under Section 10.04 shall survive
the repayment of the Loans and the termination of the Commitments. This
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Borrower's obligations hereunder,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by the Administrative Agent or
any Lender. In the event that any payment or any part thereof is so rescinded,
reduced, restored or returned, such obligations shall be reinstated and deemed
reduced only by such amount paid and not so rescinded, restored or returned.

          11.07 No Immunity. To the extent that any party hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement and the Promissory Notes.

          11.08 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

          11.09 GOVERNING LAW AND SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE PROVISIONS OF SECTION 12.16 OF THE MASTER PARTICIPATION AGREEMENT
SHALL BE DEEMED INCORPORATED HEREIN MUTATIS MUTANDIS. THE BORROWER CONFIRMS ITS
APPOINTMENT OF

                        Commercial Banks Loan Agreement



                                      -23-


CT CORPORATION AS AGENT FOR SERVICE OF PROCESS, PURSUANT TO SECTION 12.16(B) OF
THE MASTER PARTICIPATION AGREEMENT.

          11.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDERS
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED
HEREBY WHETHER BASED ON CONTRACT, TORT OR OTHER THEORY.

          11.11 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York, New York, United
States of America is of the essence, and Dollars shall be the currency of
account in all events. The provisions of Section 12.06 of the Master
Participation Agreement shall be deemed incorporated herein in its entirety.

          11.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          11.13 English Language. This Agreement is made in the English
language. Any translation of this Agreement shall have no legal validity.

            [The remainder of this page is intentionally left blank.]

                        Commercial Banks Loan Agreement



                                       S-1


     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.

                                        The Borrower

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                          Address for: Sociedad Minera Cerro Verde S.A.A.
                          Notices

                                        c/o Asiento Minero Cerro Verde
                                        Uchumayo (Arequipa/Peru), Casilla
                                        Postal #299
                                        Shipping: Av. Alfonso Ugarte #304
                                        Cercado, Arequipa, Republic of Peru
                                        Attention: General Manager
                                        Fax No.: (054) 283-376
                                        Telephone No.: (054) 283-363

                                        With a copy to: PDC, at

                                                  Phelps Dodge Tower
                                                  1 North Central Avenue
                                                  Phoenix, Arizona 85004
                                                  U.S.A
                                                  Attention: Treasurer

                                        Fax No: (602) 366-8150
                                        Telephone No: (602) 366-8100

                        Commercial Banks Loan Agreement



                                      S-2


                                        The Administrative Agent

                                        CALYON NEW YORK BRANCH,
                                        as Administrative Agent


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                   Address for notices: CALYON New York Branch
                                        1301 Avenue of the Americas
                                        New York, New York 10019

                                        Attention: Ted Vandermel
                                        Fax No.: 212.261.3421
                                        Telephone No.: 212.261.7888

                        Commercial Banks Loan Agreement



                                      S-3


                                        The Lenders

Commitment
Tranche A: US$22,500,000                CALYON NEW YORK BRANCH,
Tranche B: US$22,500,000                as Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                        Lending Office: New York Branch

                   Address for notices: CALYON New York Branch
                                        1301 Avenue of the Americas
                                        New York, New York 10019

                                        Attention: Ted Vandermel
                                        Fax No.: 212.261.3421
                                        Telephone No.: 212.261.7888

                        Commercial Banks Loan Agreement



                                      S-4


Commitment
Tranche A: US$22,500,000                MIZUHO CORPORATE BANK, LTD.,
Tranche B: US$22,500,000                as Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                        Lending Office: New York Branch

                   Address for Notices: 1251 Avenue of the Americas
                                        New York, New York 10020

                                        Attention: Paul Nicholas
                                        Fax No.: 212.282.3618
                                        Telephone No.: 212.282.4864

                        Commercial Banks Loan Agreement



                                      S-5


Commitment
Tranche A: US$22,500,000                THE BANK OF NOVA SCOTIA,
Tranche B: US$22,500,000                as Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                        Lending Office: Toronto

                   Address for Notices: Scotia Capital
                                        40 King Street West, 62nd Floor
                                        P.O. Box 4085, Station A
                                        Corporate Banking - Mining
                                        Toronto, Ontario, Canada
                                        M5W 2X6

                                        Attention: Michael K. Eddy
                                                   Alexander Mihailovich
                                        Fax No.: 416.866.2009
                                        Telephone No.: 416.866.7186/0006

                        Commercial Banks Loan Agreement



                                      S-6


Commitment
Tranche A: US$22,500,000                THE ROYAL BANK OF SCOTLAND PLC,
Tranche B: US$22,500,000                as Lender


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                        Lending Office: The Royal Bank of Scotland plc
                                        Structured Finance, Level 5
                                        135 Bishopsgate
                                        London EC2M 3UR
                                        United Kingdom

                   Address for notices: The Royal Bank of Scotland plc
                                        Structured Finance, Level 5
                                        135 Bishopsgate
                                        London EC2M 3UR
                                        United Kingdom

                                        Attention: Graham Boreham
                                        Fax No.: ++44 20 7375 8762
                                        Telephone No.: ++44 20 7648 3978

                        Commercial Banks Loan Agreement



                                                                      Appendix 1
                                                               to Loan Agreement

                           FORM OF NOTICE OF BORROWING

                                                                      [Date](12)

TO:   [________________________________________] (the "Administrative Agent")
FROM: Sociedad Minera Cerro Verde S.A.A. (the "Borrower")
RE:   Notice of Borrowing pursuant to Section 2.02 of the Commercial Banks Loan
      Agreement dated as of September 30, 2005 between the Borrower, CALYON New
      York Branch, as Administrative Agent and the Lenders party thereto (the
      "Loan Agreement")

     The Borrower hereby requests disbursement under the Loan Agreement to the
Onshore Dollars Account under the Master Security Agreement on ________, 20__
(the "Disbursement Date") in an aggregate amount equal to [US$___________ as a
Tranche A Loan] and/or [US$________ as a Tranche B Loan].(13)

     Disburse to: [name of bank in New York, account number]

     The Borrower hereby represents and warrants to the Lenders and the
Administrative Agent as of the date hereof that:

          1. The requested disbursement date is a Business Day falling on or
     before the [Tranche A Commitment Termination Date] and/or [the Tranche B
     Commitment Termination Date].(14)

          2. The requested disbursement is pro rata with disbursements requested
     under the Senior Loan Documents and is calculated in accordance with
     Section [ ] of the Master Participation Agreement.

          3. The disbursements requested hereby have been or are scheduled to be
     utilized in accordance with Section 7.04 of the Master Participation
     Agreement.

          4. The disbursements of Senior Loans made to date (if any) have been
     or are being utilized for purposes of the Sulfide Project in accordance
     with Section 7.04 of the Master Participation Agreement.

- ----------
(12) [To be dated no later than 15 Business Days before the date for the Loan to
     which this Notice of Borrowing relates.]

(13) [To be inserted as applicable.]

(14) [To be inserted as applicable.]

                  Appendix 1 to Commercial Banks Loan Agreement



                                      -2-


          5. No MPA Default or MPA Event of Default has occurred and is
     Continuing.

          6. The conditions contained in [Section 5.01 [initial disbursement
     only] and] Section 5.02 of the Master Participation Agreement 15 and
     [Section 6.01 [initial disbursement only] and] Section 6.02 of the
     Commercial Banks Loan Agreement have been satisfied (or are expected to be
     satisfied on the date of disbursement, as applicable).

     The Borrower agrees that, if prior to its receipt of the disbursement
requested hereby it determines that any matter certified by it herein will not
be true and correct as of the time of such disbursement, it will promptly so
notify the Administrative Agent. Except to the extent set forth in any such
notice, each matter certified by the Borrower herein shall be deemed once again
to be certified as true and correct as of the time of such disbursement as if
then made.

     All defined terms used herein and not defined herein have the meanings
assigned to them in the Loan Agreement.

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

- ----------
(15) [To be inserted solely in connection with the initial disbursement of
     Loans.]

                  Appendix 1 to Commercial Banks Loan Agreement



                                                                       Exhibit A
                                                               to Loan Agreement

                       [FORM OF PROMISSORY NOTE (PAGARE)]

                              PAGARE NO NEGOCIABLE

Place and date of issuance: Lima Peru, __
Amount US$__

FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A. (the
"Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange and
duly incorporated under the laws of the Republic of Peru, registered with the
Public Registry of Companies of Lima, under File No. __, and whose principal
office is at __, Republic of Peru, by this non negotiable (no negociable)
promissory note ("pagare") (the "Promissory Note"), except as permitted in
Section 12.13 (b) of the MPA, unconditionally promises to pay to the order of __
(the "Holder"), against presentment of this note, the sum of __ dollars of the
United States of America (US$__) (the "Principal Amount"), payable on the dates
set forth in the following payment schedule (each date, a "Payment Date") and in
the amounts indicated next to the applicable Payment Date, provided that the
principal amount to be paid to the Holder on a Payment Date shall not exceed the
principal amount hereof outstanding immediately prior to such Payment Date.



                             PRINCIPAL AMOUNT
       PAYMENT DATE            TO BE REPAID
- --------------------------   ----------------
                          
First Payment Date                  __

6th month after the First           __
Payment Date

12th month after the First          __
Payment Date

18th month after the First          __
Payment Date

24th month after the First          __
Payment Date

30th month after the First          __
Payment Date

36th month after the First          __
Payment Date

42nd month after the First          __
Payment Date

48th month after the First          __
Payment Date

54th month after the First          __
Payment Date

60th month after the First          __
Payment Date

66th month after the First          __
Payment Date

72nd month after the First          __
Payment Date

78th month after the First          __
Payment Date

84th month after the First          __
Payment Date

90th month after the First          __
Payment Date


     The Borrower also promises to pay to the Holder interest on the outstanding
and unpaid principal amount of this Promissory Note, from the date hereof until
the last Payment Date, at an annual rate of the Base Rate plus the Applicable
Margin (the "Interest Rate"), such interest to accrue semiannually on the
outstanding principal amount during the Interest Period. Interest shall be
payable in arrears on each Interest Payment Date. All computations of interest
shall be

                  Exhibit A to Commercial Banks Loan Agreement



                                      -2-


made on the basis of a year of 360 days and actual days elapsed (including the
first day but excluding the last day) occurring in the period for which such
interest are payable.

     If any payment to be made hereunder is due on a day which is not a Business
Day, such payment shall be made on the immediately succeeding Business Day.

     If the principal amount of this Promissory Note is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
principal amount remaining unpaid shall carry default interest for such period
of time within each related Default Interest Period during which such amount
shall remain due and unpaid at an annual rate equal to the Principal Default
Rate. If any other amount payable hereunder is not paid in full when due, then,
without prejudice to any other rights or remedies of the Holder, such amount
remaining unpaid shall carry default interest for such period of time within
each related Default Interest Period during which such amount shall remain due
and unpaid at an annual rate equal to the Other Amounts Default Rate.

     The Borrower may prepay on any Payment Date upon at least 60 days' prior
notice, all or part of the outstanding principal amount hereof, so long as, in
connection with a voluntary partial prepayment, the aggregate amount of any such
voluntary partial prepayment equals at least __(16) dollars of the United States
of America (US$__).

     Borrower shall reimburse to the Holder its funding losses or expenses (if
any) related to such prepayment, if Borrower elects to voluntarily prepay all or
part of the outstanding principal amount hereof on a date other that an Interest
Payment Date or a Payment Date, as the case may be. No premium or penalty shall
be payable in connection with other prepayments.

     Each prepayment of the outstanding principal amount hereof shall (unless
such prepayment repays in full such outstanding principal amount) be applied to
prepay ratably each outstanding installment of principal hereof remaining to be
paid as of the date of such prepayment.

     For purposes of this Promissory Note, the following terms shall have the
following meanings:

     "Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.

     "Applicable Margin" means [1.20% per annum](17).

- ----------
(16) Insert pro rata amount of the minimum prepayment amount applicable to the
     Advance(s) evidenced by the Promissory Note.

(17) On the closing date include the first applicable margin. On the Payment
     Date immediately following the Completion Release Date, the pagare shall be
     substituted to include the complete "Margin" language.

                  Exhibit A to Commercial Banks Loan Agreement



                                      -3-


     "Base Rate" means, with respect to any Interest Period or Default Interest
Period, the interest rate per annum for deposits in dollars of the United States
of America, if any, for a period equal to the relevant interest period which
appears on page 3750 on the Moneyline Telerate Inc. (or such other page or pages
as shall replace that page or pages for the purpose of displaying offered rates
of leading banks for London interbank deposits in dollars) at or about 11:00
a.m. London time on the second Eurodollar Business Day before and for value on
the first day of the Interest Period or Default Interest Period. If such rate
does not appear on page 3750 on the Moneyline Telerate Inc. or such other page
as shall replace that page for the purpose of displaying offered rates of
leading banks for London interbank deposits in Dollars, the Base Rate shall be
the interest per annum equal to the average (rounded upward to the nearest fifth
decimal place, if such average is not such a decimal) of the interest rates per
annum (as provided to the Administrative Agent) at which deposits in dollars of
the United States are offered by the principal office of each of the Reference
Banks in London, England to prime banks in the London interbank market at or
about 11:00 a.m. (London time) (or as soon thereafter as practicable) two
Eurodollar Business Days before the first day of the Interest Period or Default
Interest Period in an amount substantially equal to each such Reference Bank's
Loan comprising part of such borrowing to be outstanding during such interest
period and for a period equal to (or if there is no equal, then most comparable)
such interest period. The Base Rate for any interest period shall be determined
by the Administrative Agent on the basis of applicable rates furnished to and
received by such agent from the Reference Banks two Business Days before the
first day of such interest period. If any of the Reference Banks shall be unable
or otherwise fails to provide a rate for the purposes of determining the Base
Rate as hereinabove provided, then the Base Rate shall be determined on the
basis of the rate or rates quoted by the remaining Reference Banks.

     "Business Day" means a day on which banks are generally open for business
in New York, New York, United States, Tokyo, Japan, Frankfurt am Main, Germany,
London, England and Lima, Peru.

     "Collateral Agent" means Citibank del Peru S.A. in its capacity of onshore
collateral agent for the Holder according to the MSA.

     "Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.

     "Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.

     "Default Interest Period" means each successive period (not in excess of
six months) as the Administrative Agent shall choose (with the consent of the
Majority Bank Lenders), during which any amount payable by the Borrower
hereunder is in default. The first such period shall commence as of the date on
which such amount in default becomes due, and each such succeeding period shall
commence immediately upon the expiry of the immediately preceding period;
provided, however, that in the absence of, or pending consent of the Majority
Bank Lenders, each Default Interest Period has a duration of one month.

                  Exhibit A to Commercial Banks Loan Agreement



                                      -4-


     "Eurodollar Business Day" means any day on which banks are generally open
for business in London, England.

     "First Payment Date" means the earlier of (i) the March 20 or the September
20 next occurring after the Commercial Production Start-up Date, and (ii) March
20, 2008.

     "Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.

     "Governmental Authority" means any national, state, county, city, town,
village, municipal or other local governmental department, commission, board,
bureau, agency, authority or instrumentality of any nation that affects or may
affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.

     "Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.

     "Interest Period" means any of the following periods:

          (i) on or prior to the First Payment Date, each period commencing on
     an Interest Payment Date (or with respect to the first Interest Period on
     the date hereof) and ending on the day immediately preceding the next
     succeeding Interest Payment Date (including the first day and the last day
     of such period); and

          (ii) thereafter, each period commencing on a Payment Date and ending
     on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

     "Loan Agreement" means the Loan Agreement dated as of September 30, 2005
among the Borrower, CALYON NEW YORK BRANCH, MIZUHO CORPORATE BANK, LTD., THE
BANK OF NOVA SCOTIA, and THE ROYAL BANK OF SCOTLAND PLC.

     "MPA" means the Master Participation Agreement dated as of September 30,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
and Mizuho Corporate Bank, Ltd.

     "MSA" means the Master Security Agreement dated as of September 30, 2005
entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The

                  Exhibit A to Commercial Banks Loan Agreement



                                      -5-


Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank,
Ltd., Citibank, N.A., and Citibank del Peru S.A.

     "Other Amounts Default Rate" means the applicable Interest Rate (including
the Applicable Margin) plus 2% per annum.

     "Peruvian Income Tax Act" means the Legislative Decree 774 of December 31,
1993, as amended.

     "Principal Default Rate" means 2% per annum plus the greater of (i) the
Interest Rate (including the Applicable Margin) in effect immediately prior to
the date in which the respective principal amount became due and was not paid,
and (ii) the Base Rate for such Default Interest Period plus the Applicable
Margin.

     "Reference Banks" means, collectively CALYON New York Branch, Mizuho
Corporate Bank Ltd., Scotia Capital and The Royal Bank of Scotland plc, or such
substitute banks designated as such by CALYON New York Branch from time to time
to provide the quotations required for the determination of the Base Rate and
being the principal London offices of each such bank.

     "Sulfide Project" means the Borrower's development of a primary sulfide
portion of the ore body beneath the oxide portion of the ore body currently in
production at its Cerro Verde copper mine, located in the Districts of Uchumayo
and Yarabamba, Province of Arequipa, Peru.

     "Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.

     All payments by the Borrower of principal and interest hereunder shall be
made in dollars of the United States of America, in immediately available funds,
without deduction, set-off or counterclaim, to CALYON New York Branch for the
account of the Holder at account number __, favour __ maintained by CALYON, New
York Branch (SWIFT code __) with __ (SWIFT code [ ]), in New York, New York, not
later than 11:00 a.m. New York time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Eurodollar Business Day).

     Any and all payments made by or on account of the Borrower in respect of
any obligation hereunder shall be made free and clear of, and without deduction
or withholding for or on account of, any and all present or future Taxes
(excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now

                  Exhibit A to Commercial Banks Loan Agreement



                                      -6-


or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority of the Republic of Peru, unless such deduction or
withholding is required by an applicable Government Rule, in which case the
following paragraph shall apply.

     If the Borrower shall be required by law to deduct any Indemnified Taxes
now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.

     The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.

     The Borrower hereby irrevocably submits to the non-exclusive jurisdiction
of the Courts of Downtown Lima (Lima-Cercado) and of any Federal or State court
located in the Borough of Manhattan, The City of New York, as the Holder hereof
may elect for any proceeding arising out of or relating to this Promissory Note.
The Borrower waives, to the fullest extent it may effectively do so, the defense
of an inconvenient forum to the maintenance of such action or proceeding.

     The Parties further agree that, without prejudice to the law of the State
of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.

     This Promissory Note is issued in Spanish and English. The Parties agree
that the applicable version of this Promissory Note will be (i) the Spanish
version in case the jurisdiction of the Courts of Downtown Lima (Lima-Cercado)
is the jurisdiction elected by the Holder, or be (ii) the English version in
case the jurisdiction of any Federal or State court located in the Borough of
Manhattan, The City of New York is the jurisdiction elected by the Holder. In
case of discrepancies between the Spanish and English versions (i) the Spanish
version shall prevail when the Courts of Downtown Lima (Lima-Cercado) or other
Spanish speaking jurisdiction is the jurisdiction elected by the Holder, and
(ii) the English version shall prevail when the Federal or State court located
in the Borough of Manhattan, The City of New York or any other non-Spanish
speaking jurisdiction is the jurisdiction elected by the Holder.

Lima, __

By: Sociedad Minera Cerro Verde, S.A.A.

                  Exhibit A to Commercial Banks Loan Agreement



                                      -7-


Taxpayer Registry No.: 20170072465
Name of authorized officer: __
Identification Card No __
Power register in Entry No. __ of the Public Registry

                  Exhibit A to Commercial Banks Loan Agreement



                                                                       EXHIBIT B

           AMORTIZATION SCHEDULE



              % of aggregate amount of all
Repayment   Advances made by the Lenders to
  Number               be repaid
- ---------   -------------------------------
         
     1                    6.25
     2                    6.25
     3                    6.25
     4                    6.25
     5                    6.25
     6                    6.25
     7                    6.25
     8                    6.25
     9                    6.25
    10                    6.25
    11                    6.25
    12                    6.25
    13                    6.25
    14                    6.25
    15                    6.25
    16                    6.25


                  Exhibit B to Commercial Banks Loan Agreement



                                                                       EXHIBIT C

                       ASSIGNMENT AND ACCEPTANCE AGREEMENT

     Reference is made to the Loan Agreement dated as of September 30, 2005 (as
the same may be amended, supplemented or otherwise modified and in effect from
time to time, the "Loan Agreement"), among Sociedad Minera Cerro Verde S.A.A.,
as Borrower, each of the Lenders named therein and [ ], as Administrative Agent
for the Lenders. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Loan Agreement.

     1. [__________] (the "Assignor") hereby sells and assigns to [___________]
(the "Assignee") without recourse to the Assignor, and the Assignee hereby
purchases and assumes from the Assignor without recourse to the Assignor,
effective as of the date set forth in Schedule 1 attached hereto (the
"Assignment Date"), the interests set forth on Schedule 1 hereto (the "Assigned
Interest") in the Assignor's rights and obligations under the Loan Agreement,
including, without limitation, the interests in the Commitment of the Assignor
on the Assignment Date and the Loans owing to the Assignor which are outstanding
on the Assignment Date as listed in Schedule 1 hereto, but excluding accrued
interest and fees to and excluding the Assignment Date. The assignment executed
hereby is made pursuant to and in accordance with Section 11.05(b) of the
Commercial Banks Loan Agreement. From and after the execution and delivery by
the Assignee to the Trustee and the Administrative Agent of this Assignment and
Acceptance Agreement, (a) the Assignee shall be a party to and be bound by the
provisions of the Loan Agreement, the Master Participation Agreement and each
other Financing Document the Assignor was party to and, to the extent of the
Assigned Interest, have the rights, obligations and benefits of a Lender
thereunder holding the Commitment and Loans (or portion(s) thereof) set forth on
Schedule 1 hereto and (b) the Assignor shall, to the extent of the Assigned
Interest, be released from the Commitment and Loans (or portion(s) thereof) so
assigned.

     2. The Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim, (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Master
Participation Agreement, the Loan Agreement, the other Financing Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Master Participation Agreement, the Loan Agreement, the other
Financing Documents or any other instrument or document furnished pursuant
thereto and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of their obligations under the
Master Participation Agreement, the Senior Loan Documents, the other Financing
Documents or the Project Documents or any other instrument or document furnished
pursuant thereto.

                  Exhibit B to Commercial Banks Loan Agreement



                                      -2-


     3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance, (b) confirms that it has received
a copy of the Master Participation Agreement, the Senior Loan Documents, the
other Financing Documents and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance, (c) agrees that it will, independently and
without reliance upon the Trustee, the Administrative Agent, the Assignor or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Senior Loan Documents, the Master Participation
Agreement and the other Financing Documents, (d) appoints and authorizes the
Administrative Agent and the Administrative Agent, respectively, to take such
action as agent (in their respective capacities as Administrative Agent under
the Master Participation Agreement and Administrative Agent under the Commercial
Banks Loan Agreement, respectively), on its behalf and to exercise such powers
and discretion under the Master Participation Agreement, the Commercial Banks
Loan Agreement and each other Financing Document as are delegated to the
Administrative Agent and the Administrative Agent, respectively, by the terms
thereof, together with such powers as are incidental thereto, (e) agrees that it
will be bound by the provisions of, and will perform in accordance with their
terms all of the obligations which by the terms of the Master Participation
Agreement, the Commercial Banks Loan Agreement, the Promissory Notes and the
other Financing Documents are required to be performed by it as a Lender and (f)
specifies as its lending offices (and address for notices) the offices set forth
beneath its name on the signature pages hereof.

     From and after the Assignment Date, the Trustee and the Administrative
Agent, as applicable, shall make all payments under the Financing Documents in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest or distributions) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the
Financing Documents for periods prior to the Assignment Date directly between
themselves.

     THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.



                                      -3-


     IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                        [NAME OF ASSIGNOR]


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        [NAME OF ASSIGNEE]


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        Lending Office (and address for
                                        notices):

                                        [Address]

Acknowledged this ______ day of

___________________, ____

[___________________________________],
        as Administrative Agent


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------



                                       -4-


                                   Schedule 1
                                       to
                            Assignment and Acceptance
                             Dated ___________, ____

Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment ("Assignment Date")(18):

Amount of Assigned Tranche A Interest:
Assigned Tranche A Commitment:
Assigned Tranche A Loans outstanding as of the Assignment Date:
Assignor's Total Tranche A Commitment and Tranche A Loans Outstanding as of the
Assignment Date:
Assignee's Total Tranche A Commitment and Tranche A Loans
Outstanding as of the Assignment Date:

Amount of Assigned Tranche B Interest:
Assigned Tranche B Commitment:
Assigned Tranche B Loans outstanding as of the Assignment Date:
Assignor's Total Tranche B Commitment and Tranche B Loans Outstanding as
of the Assignment Date:
Assignee's Total Tranche B Commitment and Tranche B Loans Outstanding as of the
Assignment Date:

- ----------
(18) [Must be at least five Business Days after execution hereof by all required
     parties.]



                                    Exhibit D

                        Form of Peruvian Bonds Indenture



                                                                       EXHIBIT D
                                                FORM OF PERUVIAN BONDS INDENTURE

                            PERUVIAN BONDS INDENTURE

                                      Among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                   as Issuer,

                           CITICORP PERU S.A. S.A.B.,
                            as Common Representative,

                                       and

                             CITIBANK DEL PERU S.A.
                              as Structuring Entity

                         Dated as of ____________, 2005



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
Article I DEFINITIONS....................................................     3

Article II PURPOSE OF THE INDENTURE......................................    32
   Section 2.01   Purpose................................................    32

Article III GENERAL TERMS AND CONDITIONS OF THE PROGRAM..................    32
   Section 3.01   Placing Agent..........................................    32
   Section 3.02   Class..................................................    32
   Section 3.03   Co-Ownership...........................................    32
   Section 3.04   Issuance Costs.........................................    32
   Section 3.05   Use of Proceeds........................................    32
   Section 3.06   Issues and Series......................................    32
   Section 3.07   Placement Date.........................................    33
   Section 3.08   Issue Date.............................................    33
   Section 3.09   Collateral.............................................    33
   Section 3.10   Applicable Law.........................................    33
   Section 3.11   Place of Payment and Paying Agent......................    33
   Section 3.12   Secondary Market.......................................    33
   Section 3.13   Currency...............................................    34
   Section 3.14   Program Amount.........................................    34
   Section 3.15   Private Offering.......................................    34
   Section 3.16   Optional Redemption....................................    34
   Section 3.17   Term of the Program....................................    35
   Section 3.18   Placement Price........................................    35
   Section 3.19   Redemption of the Bonds and Payments of Principal......    35
   Section 3.20   Common Representative..................................    35
   Section 3.21   Placement of Issues....................................    35
   Section 3.22   Interest Rate..........................................    36
   Section 3.23   Face Amount of the Bonds...............................    36
   Section 3.24   Commercial Production Start-up Date....................    36
   Section 3.25   Other Terms and Conditions.............................    36

Article IV OBLIGATIONS OF THE ISSUER.....................................    36
   Section 4.01   Obligations of the Issuer..............................    36

Article V RESTRICTIONS APPLICABLE TO THE ISSUER..........................    40
   Section 5.01   Applicable Restrictions................................    40

Article VI REPRESENTATIONS AND WARRANTIES OF THE ISSUER..................    42
   Section 6.01   Organization...........................................    42
   Section 6.02   Information Disclosed and Provided.....................    42
   Section 6.03   Legal Proceedings......................................    43
   Section 6.04   Compliance with Other Instruments and Laws.............    43
   Section 6.05   Taxes..................................................    43



                                        i



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
   Section 6.06   Absence of Undisclosed Liabilities.....................    44
   Section 6.07   Financial Statements...................................    44
   Section 6.08   Ranking................................................    44
   Section 6.09   [Mining and Beneficiation Concessions..................    44
   Section 6.10   [Environmental Matters.................................    45
   Section 6.11   [Labor Matters.........................................    45
   Section 6.12   [Consents, etc.........................................    45
   Section 6.13   [No MPA Default........................................    45
   Section 6.14   [Security Documents....................................    45
   Section 6.15   Ratification and Amendment of Representations and
                  Warranties.............................................    45

Article VII COLLATERAL...................................................    46
   Section 7.01   Collateral.............................................    46
   Section 7.02   Enforcement on the Collateral..........................    46
   Section 7.03   Release of Collateral..................................    46

Article VIII DEFAULTS AND EVENTS OF DEFAULT..............................    46
   Section 8.01   Defaults...............................................    46
   Section 8.02   Occurrence of Defaults.................................    48
   Section 8.03   Events of Default and Remedies Prior to Payment in Full
                  of Senior Facility Loan Obligations....................    49
   Section 8.04   Remedies Following Payment in Full of Senior Facility
                  Loan Obligations.......................................    56
   Section 8.05   [Abandonment...........................................    59

Article IX COMMON REPRESENTATIVE.........................................    60
   Section 9.01   Duties.................................................    60
   Section 9.02   Liability..............................................    60
   Section 9.03   Powers, Rights and Duties of Common Representative With
                  Respect to Each Issue..................................    60
   Section 9.04   Powers, Rights and Duties of Common Representative With
                  Respect to All Issues..................................    62
   Section 9.05   Limited Interference in Business of the Issuer.........    63
   Section 9.06   Statutory Bondholder Remedies..........................    63
   Section 9.07   Actions of Common Representative Binding on Present and
                  Future Bondholders.....................................    63
   Section 9.08   Events of Defaults.....................................    64
   Section 9.09   Obligations of the Common Representative Pursuant to
                  Applicable Law.........................................    64
   Section 9.10   Resignation of the Common Representative...............    64
   Section 9.11   Removal of the Common Representative...................    65
   Section 9.12   Dissolution of the Common Representative...............    66
   Section 9.13   Consultation with Counsel, etc.........................    66

Article X BONDHOLDERS MEETINGS...........................................    66
   Section 10.01  Powers of the General Meeting..........................    66



                                       ii



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
   Section 10.02  Powers of the Special Meeting..........................    67
   Section 10.03  Notice of a General Meeting or Special Meeting.........    68
   Section 10.04  Quorum, Installation and Resolutions...................    69

Article XI ISSUER'S INDEMNIFICATION......................................    72
   Section 11.01  Claims Indemnified.....................................    72
   Section 11.02  Claims Excluded........................................    72
   Section 11.03  Claim Procedure........................................    72
   Section 11.04  Issuer's Rights Under Applicable Law...................    73

Article XII ARBITRATION..................................................    73
   Section 12.01  Resolution of Disputes Through Arbitration.............    73
   Section 12.02  Arbitration Procedure..................................    73

Article XIII MISCELLANEOUS...............................................    74
   Section 13.01  Statement of Equivalence...............................    74
   Section 13.02  Notices................................................    74
   Section 13.03  Interpretation.........................................    76
   Section 13.04  Severability...........................................    76
   Section 13.05  Governing Law..........................................    76
   Section 13.06  Public Instrument......................................    76


Schedule A -- Committed Amounts
Schedule B -- Mining Concessions
Schedule 6.04 -- Core Governmental Approval
Schedule 6.05 -- Taxes
Schedule 6.09 -- Mining Benefits and Concessions
Schedule 6.10 -- [Environmental Matters]
Schedule 6.11 -- [Labor Matters]
Schedule 6.12 -- [Consents]


                                       iii



The Notary Public is hereby requested to enter in his Register of Public
Instruments this Bond Issue Indenture (hereinafter the "Indenture"), entered
into by and between:

- -    Sociedad Minera Cerro Verde S.A.A., (the "Issuer"), a company (a) duly
     organized and existing under the laws of the Republic of Peru, with
     Taxpayer Registration (RUC) No __, with a place of business for all
     purposes hereof at __, (b) duly represented by its General Manager, Mr. __,
     identified with National Identity Document (DNI) No __and by its Financial
     Manager, Mr. __, identified with [foreign] identity card No. __, and (c)
     authorized for such purpose by that certain meeting of the Board of
     Directors of the Issuer held on __; and

- -    Citicorp Peru S.A. S.A.B., (the "Common Representative"), a company (a)
     duly organized and existing under the laws of the Republic of Peru, with
     Taxpayer Registration No __, with a place of business for all purposes
     hereof at __, and (b) duly represented by __, identified with National
     Identity Document (DNI) No __, pursuant to the power of attorney recorded
     on file No __ of the Lima and Callao Corporate Register;

With the intervention of:

- -    Citibank del Peru S.A., (the "Structuring Entity"), a company (a) duly
     organized and existing under the laws of the Republic of Peru, with
     Taxpayer Registration (RUC) No __, with a place of business for all
     purposes hereof at __, and (b) duly represented by its attorney-in-fact,
     Mr. __, identified with National Identity Document (DNI) No __, pursuant to
     the power of attorney recorded on file No __ of the Lima and Callao
     Corporate Register;

Subject to the terms and conditions set forth in the following clauses:

                                    RECITALS

     (a) The Issuer is a stock corporation incorporated under the laws of the
Republic of Peru, established for an indefinite term, the purpose of which is to
engage in mining activities, under its by-laws and Applicable Law;

     (b) The Issuer was organized by public instrument dated __, drawn up before
the Notary Public in and for Lima, __, and recorded in file No __ of the Lima
and Callao Public Mining Registry Office. The Issuer is regulated by its
by-laws, the General Corporate Law and other Applicable Law;

     (c) The Shareholders' Equity of the Issuer is US$ __ (__ and 00/100
Dollars), as stated in the audited annual financial statements of the Issuer as
of __. The registered capital stock of the Issuer on the date hereof is S/.__
(__ and 00/100 Nuevos Soles);

     (d) The Issuer owns the Cerro Verde copper mine, including a copper
leaching and solution extraction/electrowinning (SX/EW) operation, located in
the District of Uchumayo and Yarabamba, Province of Arequipa, Peru (the "CURRENT
OPERATIONS");



     (e) The Board of Directors of the Issuer has approved the development of a
primary sulfide portion of the ore body beneath the oxide portion of the ore
body currently in production (the "SULFIDE PROJECT");

     (f) By resolution of the general shareholder meeting, dated __ (the
"GENERAL SHAREHOLDERS' MEETING"), the Shareholders approved the issuance of the
Bonds through the Program in an amount not to exceed US$[250,000,000.00] (two
hundred and fifty million and 00/100 Dollars);

     (g) Likewise, such General Shareholders' Meeting authorized the Board of
Directors of the Issuer to agree and decide on the terms and conditions of the
Program and the various Issues to be made thereunder and to delegate all or some
of such power in the officers or attorneys of the Issuer that they may deem
convenient;

     (h) Pursuant to the aforementioned authorization, the meeting of the Board
of Directors of the Issuer held on __ empowered Mr. __ and __ with the same
powers granted to the Board of Directors by the General Shareholders' Meeting,
including the power to agree on the terms and characteristics of the Program
including the various Issues to be made thereunder. Additionally, the
aforementioned officers were also authorized to execute, either jointly or
severally, any and all public and/or private documents deemed appropriate or
necessary for the purposes of the Program and each Issue to be made thereunder;

     (i) Pursuant to the aforementioned authorization, the general terms and
conditions of the Program (as set forth herein) have been agreed upon. The
specific terms and conditions of each Issue under the Program are to be
determined in the applicable supplements to the Offering Circular and the
Supplemental Indentures;

     (j) On September 30, 2005, the Issuer entered into that certain Master
Security Agreement (the "MASTER SECURITY AGREEMENT"), by and among the Issuer,
Japan Bank for International Cooperation ("JBIC"), Sumitomo Mitsui Banking
Corporation ("SMBC"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"), KfW ("KFW"),
Calyon New York Branch ("CALYON"), The Royal Bank of Scotland PLC ("RBS"), The
Bank of Nova Scotia ("SCOTIA CAPITAL"), Mizuho Corporate Bank ("MIZUHO" and
collectively with JBIC, SMBC, BOT-M, KfW, Calyon, RBS and Scotia Capital, the
"SENIOR FACILITY LENDERS"), Calyon, as administrative agent (the "ADMINISTRATIVE
AGENT"), Citibank, N.A., as trustee and offshore collateral agent (in such
capacities, the "TRUSTEE" and the "OFFSHORE COLLATERAL AGENT") and Citibank del
Peru S.A., as onshore collateral agent (the "ONSHORE COLLATERAL AGENT");

     (k) On September 30, 2005, the Issuer entered into that certain Master
Participation Agreement (as amended, supplemented and modified in accordance
with terms thereof, the "MASTER PARTICIPATION AGREEMENT"), by and among the
Issuer, JBIC, SMBC, BOT-M, KfW, the Commercial Banks and the Administrative
Agent;

     (l) On September 30, 2005, the Issuer entered into that certain Completion
Guarantee (as amended, supplemented and modified in accordance with terms
thereof, the "COMPLETION GUARANTEE") among the Parent Companies (as defined
herein), the Issuer, the Senior Facility Lenders and the Administrative Agent.


                                        2



                                    ARTICLE I

                                   DEFINITIONS

In this Indenture, the following terms and expressions shall have the following
meanings:

                              
ABANDONMENT                      the meaning given in Section 8.05 of this
                                 Indenture.

ABANDONMENT EVENT OF DEFAULT     the meaning given in Section 8.02(d) of this
                                 Indenture.

ABANDONMENT INQUIRY              the meaning given in Section 8.05 of this
                                 Indenture.

ABANDONMENT TRIGGERING EVENT     the meaning given in Section 8.05 of this
                                 Indenture.

ACCOUNTS:                        the Proceeds Account, the Onshore Dollars
                                 Account, the Onshore Nuevos Soles Account, the
                                 Operating Onshore Dollars Account and the
                                 Operating Onshore Nuevos Soles Account, each
                                 established pursuant to the Master Security
                                 Agreement.

ADMINISTRATIVE AGENT:            the meaning given in the recitals to this
                                 Indenture.

ADVANCE:                         any advance made by a Senior Facility Lender
                                 from time to time pursuant to the applicable
                                 Senior Facility Loan Agreement.

AFFILIATES:                      with respect to any Person (the "FIRST
                                 PERSON"), any other Person (the "SECOND
                                 PERSON") which directly or indirectly controls,
                                 or is under common control with, or is
                                 controlled by, such First Person. As used in
                                 this definition, "control" (including, with its
                                 correlative meanings "CONTROLLED BY" and "UNDER
                                 COMMON CONTROL WITH") shall mean possession,
                                 directly or indirectly, of power (whether or
                                 not exercised) to direct or cause the direction
                                 of or exercise a controlling influence on
                                 management or policies (whether through legal
                                 or beneficial




                                        3



                              
                                 ownership of securities or partnership or other
                                 ownership interests, by contract,
                                 representation on the board of directors or
                                 similar governing body or otherwise).

AGGREGATE COMMITTED AMOUNT:      with respect to each Senior Facility Lender,
                                 the sum of its Base Committed Amount and
                                 Stand-By Committed Amount, if any.

AGGREGATE ISSUED BOND AMOUNT:    with respect to the Bonds, the aggregate
                                 principal amount of Bonds issued by the Issuer
                                 pursuant to this Indenture and the applicable
                                 Supplemental Indentures.

ANCILLARY CAPITAL
EXPENDITURES:                    capital expenditures that are neither
                                 Incremental Capital Expenditures nor Sustaining
                                 Capital Costs.

APPLICABLE ENVIRONMENTAL LAWS    any statute, law, ordinance, code, rule,
                                 regulation, order, decree or other requirement
                                 of any Peruvian Governmental Authority
                                 regulating the protection of human health (as
                                 it relates to releases of, or exposure to,
                                 hazardous substances) or the environment,
                                 applicable to the Sulfide Project and the
                                 Issuer.

APPLICABLE LAW:                  the legal rules and provisions in force in the
                                 Republic of Peru.

ASSIGNED AGREEMENTS:             the meaning given in Section 3.03 of the Master
                                 Security Agreement.

AVAILABILITY PERIOD END DATE:    the earliest of (i) the Completion Release
                                 Date, (ii) the date of full utilization of
                                 the Senior Facility Loans and (iii) the date
                                 that is 30 months after the date of the initial
                                 disbursement of the first Base Advance, but in
                                 any event no later than one month prior to the
                                 first Payment Date.

BANKRUPTCY EVENT OF DEFAULT:     the meaning given in Section 8.02(c) of this
                                 Indenture.




                                        4



                              
BASE ADVANCE:                    those Advances requested by the Issuer from the
                                 Senior Facility Lenders on a pro rata basis up
                                 to their respective Base Committed Amounts,
                                 pursuant to the terms of the Master
                                 Participation Agreement.

BASE COMMITTED AMOUNT:           with respect to each Senior Facility Lender,
                                 the amount set forth opposite its name on
                                 Schedule A hereto, in the column entitled "Base
                                 Committed Amounts", as such amount may be
                                 adjusted from time to time.

BENEFICIATION CONCESSION:        the beneficiation concession identified on
                                 Schedule B hereto.

BONDHOLDER:                      the holder of one or more Bonds.

BONDS:                           registered securities to be issued by the
                                 Issuer pursuant to this Indenture and the
                                 applicable Supplemental Indentures, and,
                                 subject to Section 7.03 secured by the
                                 Collateral.

BONDS OBLIGATIONS:               the obligations to pay the principal of and
                                 interest on the Bonds, including any interest
                                 accruing after the filing of a petition in
                                 bankruptcy or the commencement of any
                                 insolvency or bankruptcy proceedings with
                                 respect to the Issuer, and all commissions,
                                 fees, indemnities and other amounts payable to
                                 the Bondholders under this Indenture.

BOT-M:                           the meaning given in the recitals to this
                                 Indenture.

BUSINESS:                        the Sulfide Project and the Current Operations.

BUSINESS DAY:                    a day on which banks are generally open for
                                 business in Lima, Peru.

BVN:                             Compania de Minas Buenaventura S.A.A.




                                        5



                              
CALYON:                          the meaning given in the recitals to this
                                 Indenture.

CALYON LENDER:                   Calyon or any assignee of Calyon that (i) has
                                 purchased Senior Facility Loans in excess of
                                 U.S.$10 million and (ii) has been designated by
                                 Calyon, or by the immediate predecessor Calyon
                                 Lender, by written notice to the Administrative
                                 Agent and the Issuer as the Calyon Lender.

CAPITAL LEASE OBLIGATIONS:       for any Person, the obligations of such Person
                                 to pay rent or other amounts under a lease of
                                 (or other agreement conveying the right to use)
                                 any Property which obligations are required to
                                 be classified and accounted for as a capital
                                 lease on a balance sheet of such Person under
                                 United States GAAP and, for the purposes hereof
                                 the amount of such obligations shall be the
                                 capitalized amount thereof, determined in
                                 accordance with United States GAAP.

CATHODES:                        the copper cathodes produced by the Issuer.

CAVALI:                          the meaning given in Section 3.02 of this
                                 Indenture.

CCMC:                            Cyprus Climax Metals Company.

CLAIMS:                          the meaning given in Section 11.01 of this
                                 Indenture.

CLOSING DATE:                    The date of disbursement of the initial Base
                                 Advance by the Senior Facility Lenders.

CLOSING PROJECT DOCUMENTS:       collectively, the Offtake Agreements, the Power
                                 Supply Agreements, the Construction Agreements,
                                 the Operator's Agreement and the Port Services
                                 Agreement.




                                       6



                              
COLLATERAL:                      the collateral to be secured from time to time
                                 pursuant to the Master Security Agreement or
                                 any other Security Document.

COMMERCIAL BANKS LOAN
AGREEMENT:                       the Senior Facility Loan Agreement entered into
                                 among the Issuer, the Administrative Agent and
                                 the Commercial Banks.

COMMERCIAL BANKS:                any of Calyon, RBS, Scotia Capital or Mizuho.

COMMERCIAL PRODUCTION START-UP
DATE:                            the meaning given in Section 3.24 of this
                                 Indenture.

COMMITMENT:                      the Commitment of each Senior Facility Lender
                                 to make Advances pursuant to the Senior
                                 Facility Loan Agreement to which it is a party.

COMMON REPRESENTATIVE:           the meaning given in the preamble to this
                                 Indenture and any permitted successors and
                                 assigns.

COMPLETION GUARANTEE:            the meaning given in the recitals to this
                                 Indenture.

COMPLETION RELEASE DATE:         the date of achievement of either (i) Full
                                 Completion or (ii) Partial Completion.

CONASEV:                         National Supervisory Commission of Companies
                                 and Securities (Comision Nacional Supervisora
                                 de Empresas y Valores).

CONCENTRATES:                    the copper concentrate to be produced by the
                                 Issuer pursuant to the Sulfide Project.

CONCESSIONS:                     collectively, the Beneficiation Concession and
                                 the Mining Concessions.




                                        7



                              
CONSTRUCTION AGREEMENTS:         the Construction Agreement No. CV 12915, dated
                                 as of December 14, 2004, between the Issuer and
                                 Fluor Daniel Sucursal Del Peru; and the
                                 Engineering Agreement No. CV 12913, dated as of
                                 December 14, 2004, between the Issuer and Fluor
                                 Canada Ltd.

CORE GOVERNMENTAL APPROVAL:      the meaning given in Section 6.04(d) of this
                                 Indenture.

CORE MINING CONCESSIONS:         collectively, Cerro Verde Mining Concession 1,
                                 2, 3 and the Beneficiation Concession.

COURT OF ARBITRATION:            the meaning given in Section 12.02(a) of this
                                 Indenture.

CURRENT OPERATIONS:              the meaning given in the recitals to this
                                 Indenture.

DEBT BUY-DOWN RELEASE DATE:      the date upon which any of the circumstances
                                 described in Section 3.03(d) of the Completion
                                 Guarantee shall occur.

DEFAULT:                         the meaning given in Section 8.01 of this
                                 Indenture.

DEFAULT RATE:                    the annual default rate that will be applied,
                                 without demand or notice, upon the occurrence
                                 of a Payment Default with respect to a specific
                                 Issue or Series, as an additional charge and
                                 without prejudice to payment of interest
                                 accrued at the Interest Rate applicable to the
                                 applicable Issue or Series. The Default Rate
                                 shall be set forth in the applicable
                                 Supplemental Indenture, Pricing Supplement
                                 and/or public offering notice.

DISBURSEMENT DATE:               the date requested for the disbursement of a
                                 Base Advance or a Stand-By Advance, as the case
                                 may be, in the relevant notice delivered by the
                                 Issuer to the applicable Senior Facility Lender
                                 pursuant to the relevant Senior Facility Loan
                                 Agreement.




                                        8



                              
DOLLARS OR US$:                  the lawful currency of the United States.

EARLY REDEMPTION:                the meaning given in Section 3.16(a) of this
                                 Indenture.

EARLY REDEMPTION DATE:           the meaning given in Section 3.16(a) of this
                                 Indenture.

EQUIVALENT:                      for any amount, the calculation of currency
                                 equivalents on any day which such calculation
                                 shall be based on the foreign exchange spot
                                 mid-rates for such day reported in The Wall
                                 Street Journal, Eastern Edition, or, if not so
                                 reported, on the mid-market foreign exchange
                                 spot closing rates for such day reported in the
                                 Financial Times, or, if not so reported, on
                                 spot foreign exchange mid-market rates for
                                 trading among banks in amounts of
                                 U.S.$1,000,000 and more as quoted by or to the
                                 Trustee.

EVENT OF DEFAULT:                any of an Ordinary Event of Default, a Payment
                                 Event of Default, a Bankruptcy Event of
                                 Default, and an Abandonment Event of Default.

EVENT OF POLITICAL FORCE
MAJEURE:                         the occurrence of an Expropriatory Action, War
                                 or a material breach or effective unilateral
                                 amendment or cancellation by the Republic of
                                 Peru of the Stability Agreement (it being
                                 understood that an assertion or determination
                                 that certain benefits of the Stability
                                 Agreement do not apply to part of the
                                 operations of the Issuer will not be treated as
                                 an Event of Political Force Majeure).

EXPENSE CAP:                     the meaning given in Section 4.01(l) of this
                                 Indenture.

EXPROPRIATORY ACTION:            any action or series of actions (individually
                                 or in the aggregate together with similar prior
                                 actions or series of actions) that is taken,
                                 authorized or ratified by Peru or any agency,
                                 instrumentality or political subdivision
                                 thereof, for the appropriation, requisition,
                                 confiscation,




                                        9



                              
                                 expropriation or nationalization (by
                                 intervention, condemnation or other form of
                                 taking), whether with or without compensation,
                                 of (i) equity interests constituting more than
                                 20% of aggregate common equity interests in the
                                 Issuer, or (ii) ownership or control of the
                                 Project Property or any substantial part
                                 thereof the loss of which would have a Material
                                 Adverse Effect.

FINANCIAL STATEMENTS:            the meaning given in Section 6.07 of this
                                 Indenture.

FINANCING DOCUMENTS:             the Senior Lenders Financing Documents and the
                                 Senior Facility Lenders Financing Documents.

FULL COMPLETION:                 for purposes of the Completion Guarantee, the
                                 full completion of the Sulfide Project which
                                 shall occur upon the delivery by the Issuer to
                                 the Administrative Agent of the certificates
                                 and other documents listed in clauses (a)
                                 through (h) of Section 2.01 of the Completion
                                 Guarantee.

GENERAL CORPORATE LAW:           Law No 26887, as amended.

GENERAL MEETING:                 any meeting to which all of the Bondholders are
                                 entitled to attend, as provided in Article X of
                                 this Indenture.

GENERAL SHAREHOLDERS' MEETING:   the meaning given in the recitals to this
                                 Indenture.

GOVERNMENTAL APPROVAL:           any authorization, consent, approval, license,
                                 ruling, permit, concession, certification,
                                 exemption, filing (other than with respect to
                                 the perfection of any security interest),
                                 variance, order, judgment, decree, publication,
                                 notice to, declaration of or with or
                                 registration by or with any Governmental
                                 Authority.

GOVERNMENTAL AUTHORITY:          any national, state, county, city, town,
                                 village, municipal or other local governmental
                                 department, commission, board, bureau, agency,
                                 authority or




                                       10



                              
                                 instrumentality of any nation that affects or
                                 may affect the transactions contemplated hereby
                                 or any political subdivision thereof, and any
                                 Person exercising executive, legislative,
                                 judicial, regulatory or administrative
                                 functions of or pertaining to any of the
                                 foregoing entities, including, without
                                 limitation, all commissions, boards, bureaus,
                                 arbitrators and arbitration panels, and any
                                 authority or other Person controlled by any of
                                 the foregoing.

GUARANTEE RELEASE DATE:          either (i) the date of achievement of Full
                                 Completion, with respect to all Parent
                                 Companies, or (ii) the date of occurrence of
                                 the Debt Buy-Down Release Date as contemplated
                                 under Section 3.03(d) of the Completion
                                 Guarantee.

IDENTIFIED MATERIAL PROJECT
DOCUMENTS:                       the Offtake Agreements, the Operator's
                                 Agreement, the Power Supply Agreements,
                                 evidence of the Issuer's water rights for the
                                 Sulfide Project and the Core Mining
                                 Concessions, and, in each case, any substitute
                                 agreement thereto entered into after the date
                                 hereof.


INCREMENTAL CAPITAL
EXPENDITURES:                    capital expenditures made to implement
                                 productivity improvements.

INDEBTEDNESS:                    for any Person, without duplication, (i) all
                                 indebtedness created, issued or incurred by
                                 such Person for borrowed money (whether by loan
                                 or the issuance and sale of debt securities or
                                 the sale of Property to another Person subject
                                 to an understanding or agreement, contingent or
                                 otherwise, to repurchase such Property from
                                 such Person); (ii) obligations of such Person
                                 to pay the deferred purchase or acquisition
                                 price of Property or services, other than trade
                                 accounts payable arising, and accrued expenses
                                 incurred, in the ordinary course of business so
                                 long as such trade accounts payable are payable
                                 within 90 days after the date the respective
                                 goods




                                       11



                              
                                 are delivered or the respective services are
                                 rendered; (iii) obligations of such Person in
                                 respect of letters of credit or similar
                                 instruments issued or accepted by banks and
                                 other financial institutions for account of
                                 such Person; (iv) all indebtedness of others
                                 secured by (or for which the holder of any such
                                 obligation has an existing right, contingent or
                                 otherwise, to be secured by) a Lien on any
                                 Property of such Person, whether or not such
                                 Indebtedness so secured thereby has been
                                 assumed by such Person; (v) Capital Lease
                                 Obligations of such Person; and (vi)
                                 indebtedness of others guaranteed by such
                                 Person.

INDEMNITEE or INDEMNITEES:       the meaning given in Section 11.01 of this
                                 Indenture.

INDENTURE:                       the meaning given in the preamble to this
                                 Indenture.

INSURANCE:                       property and casualty insurance coverage
                                 maintained by the Issuer with respect to the
                                 Issuer's Property.

INTEREST PAYMENT:                the meaning given in Section 3.22(b) of this
                                 Indenture.

INTEREST PAYMENT DATE:           the meaning given in Section 3.22(c) of this
                                 Indenture.

INTEREST RATE:                   the meaning given in Section 3.22(a) of this
                                 Indenture.

ISSUE:                           any of the various issues of Bonds issued by
                                 the Issuer under the Program.

ISSUE DATE:                      the meaning given in Section 3.08 of this
                                 Indenture.

ISSUER:                          the meaning given in the preamble to this
                                 Indenture.

JBIC:                            the meaning given in the recitals to this
                                 Indenture.




                                       12



                              
JBIC LOAN AGREEMENT:             the Senior Facility Loan Agreement entered into
                                 among the Issuer, the JBIC Agent (as defined
                                 therein) and JBIC.

KFW:                             the meaning given in the recitals to this
                                 Indenture.

KFW LENDER:                      KfW or any assignee of KfW that (i) has
                                 purchased Senior Facility Loans in excess of
                                 U.S.$10 million and (ii) has been designated by
                                 KfW, or by the immediate predecessor KfW
                                 Lender, by written notice to the Administrative
                                 Agent and the Issuer as the KfW Lender, unless
                                 KfW has suspended it Commitment and the Issuer
                                 has entered into a Replacement Loan Agreement
                                 with a Replacement Lender that is not an
                                 Affiliate of a Parent Company in which case
                                 such Replacement Lender shall become the KfW
                                 Lender.

KFW LOAN AGREEMENT:              the Senior Facility Loan Agreement entered into
                                 between the Issuer and KfW.

LIEN:                            with respect to any Property, any mortgage,
                                 lien, pledge, charge, lease, easement,
                                 servitude, right of others, security interest
                                 or encumbrance of any kind in respect of such
                                 Property. For the purposes of this definition,
                                 any Person shall be deemed to own subject to a
                                 Lien any Property which it has acquired or
                                 holds subject to the interest of a vendor or
                                 lessor under any conditional sale agreement,
                                 capital lease or other title retention
                                 agreement (other than an operating lease)
                                 relating to such Property.

MAJORITY FACILITY LENDERS:       with respect to any vote or decision to be made
                                 by Senior Facility Lenders, (i) before the
                                 Availability Period End Date, a vote or
                                 decision made by (x) Senior Facility Lenders
                                 with a cumulative Aggregate Committed Amount
                                 greater than 66 2/3% of the cumulative
                                 Aggregate Committed Amount of all Senior
                                 Facility Lenders and (y) at least 4




                                       13



                              
                                 Senior Facility Lenders Votes; and (ii) after
                                 the Availability Period End Date, a vote or
                                 decision made by (x) Senior Facility Lenders
                                 holding Senior Facility Loans with an
                                 Outstanding Advance Amount greater than 66 2/3%
                                 of the Outstanding Advance Amount of the Senior
                                 Facility Loans held by all Senior Facility
                                 Lenders and (y) at least 4 Senior Facility
                                 Lenders Votes.

MAJORITY LENDERS:                with respect to any vote or decision to be made
                                 by Senior Lenders, (i) before the Availability
                                 Period End Date, a vote or decision made by (x)
                                 Senior Lenders with, in the case of Senior
                                 Facility Lenders, a cumulative Aggregate
                                 Committed Amount and, in the case of the
                                 Bondholders, an Aggregate Issued Bond Amount
                                 greater than 66 2/3% of the sum of the
                                 cumulative Aggregate Committed Amount of all
                                 Senior Facility Lenders and the Aggregate
                                 Issued Amount of all Bonds and (y) at least 5
                                 Senior Lenders Votes (or, prior to an issuance
                                 of Bonds, 4 Senior Facility Lenders Votes); and
                                 (ii) after the Availability Period End Date, a
                                 vote or decision made by (x) Senior Lenders
                                 holding Senior Loans with an Outstanding
                                 Advance Amount greater than 66 2/3% of the
                                 Outstanding Advance Amount of the Senior Loans
                                 held by all Senior Lenders and (y) at least 5
                                 Senior Lenders Votes (or, prior to an issuance
                                 of Bonds, 4 Senior Facility Lenders Votes).

MASTER PARTICIPATION
AGREEMENT:                       the meaning given in the recitals to this
                                 Indenture.

MASTER SECURITY AGREEMENT:       the meaning given in the recitals to this
                                 Indenture.

MATERIAL ADVERSE EFFECT:         a Material Adverse Lender Effect and/or a
                                 Material Adverse Project Effect.

MATERIAL ADVERSE LENDER
EFFECT:                          a material adverse effect on (i) the ability of
                                 the Issuer to timely pay the Senior Loan




                                       14



                              
                                 Obligations, (ii) the security interests
                                 granted by Issuer pursuant to the Security
                                 Documents (other than to the extent listed in
                                 legal opinions of counsel to the Issuer
                                 delivered on or prior to the date of issuance
                                 of the Bonds), (iii) the rights and remedies of
                                 the Senior Lenders under any Financing
                                 Document, Project Document, the Indenture or
                                 any Supplemental Indenture (iv) the Collateral
                                 (taken as a whole), (v) the ability of the
                                 Issuer or (prior to the Guarantee Release Date)
                                 any Parent Company to timely perform any of its
                                 respective material obligations under the
                                 Indenture, any Supplemental Indenture or any
                                 Financing Document to which it is a party or
                                 (vi) the validity or enforceability of any
                                 Financing Document, the Indenture or any
                                 Supplemental Indenture.

MATERIAL ADVERSE PROJECT         a material adverse effect on the ability of the
EFFECT:                          Issuer to complete and operate the Sulfide
                                 Project as contemplated in the Identified
                                 Material Project Documents, (ii) the Current
                                 Operations or the Sulfide Project, including
                                 the projected costs of construction, operation
                                 or maintenance of the Sulfide Project, or (iii)
                                 the ability of the Issuer or any Parent Company
                                 to timely perform any of its respective
                                 material obligations under any Project Document
                                 to which it is a party or (iv) the validity or
                                 enforceability of any Project Document.

MATURITY DATE:                   the meaning given in Section 3.19 of this
                                 Indenture.

MINING CONCESSIONS:              the mining concessions owned by the Issuer and
                                 identified on Schedule B hereto.

MIZUHO:                          the meaning given in the recitals to this
                                 Indenture.

MIZUHO LENDER:                   Mizuho or any assignee of Mizuho that (i) has
                                 purchased Senior Facility Loans in




                                       15



                              
                                 excess of U.S.$10 million and (ii) has been
                                 designated by Mizuho, or the immediate
                                 predecessor Mizuho Lender, by written notice to
                                 the Administrative Agent and the Issuer as the
                                 Mizuho Lender.

NEW PARTY ACCESSION AGREEMENT:   the meaning given in Section 3.09 of this
                                 Indenture.

NOTICE OF ABANDONMENT EVENT OF   the meaning given in Section 8.03(d)(iii)(A) of
DEFAULT:                         this Indenture.

NOTICE OF BANKRUPTCY EVENT OF    the meaning given in Section 8.03(c)(iv) of
DEFAULT:                         this Indenture.

NOTICE OF INDENTURE EVENT OF     any of the Notice of Abandonment Event of
DEFAULT:                         Default, the Notice of Bankruptcy Event of
                                 Default, the Notice of Ordinary Event of
                                 Default and the Notice of Payment Event of
                                 Default.

NOTICE OF ORDINARY EVENT OF      the meaning given in Section 8.03(a)(iii) of
DEFAULT:                         this Indenture.

NOTICE OF ORDINARY DEFAULT       the meaning given in Section 8.02(a)of this
                                 Indenture.

NOTICE OF PAYMENT EVENT OF       the meaning given in Section 8.03(b)(ii)(A) of
DEFAULT:                         this Indenture.

NUEVOS SOLES:                    the lawful currency of the Republic of Peru.

OFFERING CIRCULAR:               the framework informative prospectus relating
                                 to the Program, as amended, modified, restated
                                 or supplemented from time to time.

OFFSHORE COLLATERAL:             the non-Peruvian collateral to be secured from
                                 time to time by the Master Security Agreement
                                 or any other Offshore Security Document,
                                 including (i) the non-domestic Sales
                                 Agreements, (ii) the Assigned Agreements and
                                 (iii) the Proceeds Accounts.




                                       16



                              
OFFSHORE COLLATERAL AGENT:       the meaning given in the recitals to this
                                 Indenture.

OFFSHORE SECURITY DOCUMENTS:     the Master Security Agreement and each other
                                 agreement or document, filings, notices,
                                 arrangements or the like which are required to
                                 establish and maintain the security interest in
                                 the Offshore Collateral for the benefit of the
                                 Secured Parties.

OFFTAKE AGREEMENTS:              the PDC Guarantee, the SMM Concentrate Sales
                                 Agreement, the PD Concentrate Sales Agreement
                                 and the PD Cathodes Sales Agreement.

ONSHORE ACCOUNTS:                the Onshore Dollars Account, the Onshore Nuevos
                                 Soles Account, the Operating Onshore Dollars
                                 Account and the Operating Onshore Nuevos Soles
                                 Account.

ONSHORE COLLATERAL:              the Peruvian collateral to be secured from time
                                 to time by the Master Security Agreement or any
                                 other Onshore Security Document, including (i)
                                 currently-owned or after-acquired Project
                                 Property, (ii) the Core Mining Concessions
                                 required to be mortgaged pursuant to the Master
                                 Security Agreement, (iii) the domestic Sales
                                 Agreements, if any, (iv) the Onshore Accounts
                                 to the extent provided in the Master Security
                                 Agreement, and (v) the SMCV Shares.

ONSHORE COLLATERAL AGENT:        the meaning given in the recitals to this
                                 Indenture.

ONSHORE DOLLARS ACCOUNT:         the meaning given in Section 4.01(a)(ii) of the
                                 Master Security Agreement.

ONSHORE NUEVOS SOLES ACCOUNT:    the meaning given in Section 4.01(a)(iv) of the
                                 Master Security Agreement.

ONSHORE SECURITY DOCUMENTS:      each of the following documents governed by
                                 Peruvian law: (i) the mining mortgages
                                 (hipoteca minera), the mining pledge (prenda
                                 minera) (equipment, machinery and movable
                                 assets), the floating mining




                                       17



                              
                                 pledge (prenda minera flotante) (minerals and
                                 Cathode and Concentrate in inventory), each
                                 granted pursuant to Section 3.01 of the Master
                                 Security Agreement, (ii) the conditional
                                 assignments of rights (cesion condicionada de
                                 derechos) granted pursuant to Section
                                 3.02(a)(ii) of the Master Security Agreement,
                                 (iii) the Contrato de Cuenta Escrow for Onshore
                                 Accounts executed pursuant to Section 3.05(b)
                                 of the Master Security Agreement, (iv) the
                                 pledge (prenda) for the SMCV Shares pursuant to
                                 Section 3.07 of the Master Security Agreement,
                                 and (v) the civil mortgages (hipoteca), if any,
                                 and the industrial pledge (prenda industrial),
                                 if any, each granted pursuant to Section
                                 3.09(b) of the Master Security Agreement, and
                                 (vi) any other agreement or document, filings,
                                 notices, arrangements or the like which are
                                 required to establish and maintain the security
                                 interest in the Onshore Collateral for the
                                 benefit of the Senior Lenders.

OPERATING ONSHORE DOLLARS        the meaning given in Section 4.01(a)(iii) of
ACCOUNT:                         the Master Security Agreement.

OPERATING ONSHORE NUEVOS         the meaning given in Section 4.01(a)(v) of the
SOLES ACCOUNT:                   Master Security Agreement.

OPERATOR:                        Minera Phelps Dodge Del Peru S.A.C.

OPERATOR'S AGREEMENT:            the Operator's Agreement, dated as of June 1,
                                 2005, between the Issuer and the Operator.

ORDINARY DEFAULT CURE PERIOD:    the meaning given in Section 8.02(a) of this
                                 Indenture.

ORDINARY EVENT OF DEFAULT:       the meaning given in Section 8.02(a) of this
                                 Indenture.

OUTSTANDING ADVANCE AMOUNT:      with respect to each Senior Facility Lender,
                                 the sum of its Outstanding Base Amount and, if
                                 applicable, its Outstanding Stand-By Amount
                                 and, with respect to the




                                       18



                              
                                 Bonds, the corresponding Outstanding Bond
                                 Amount.

OUTSTANDING BASE AMOUNT:         on any date, with respect to each Senior
                                 Facility Lender, the aggregate unpaid amount,
                                 on such date, of all Base Advances made by such
                                 Senior Facility Lender.

OUTSTANDING BOND AMOUNT:         on any date, with respect to the Bonds, the
                                 principal amount of Bonds outstanding on such
                                 date.

OUTSTANDING STAND-BY AMOUNT:     on any date, with respect to each Commercial
                                 Bank, the aggregate unpaid amount, on such
                                 date, of all Stand-By Advances made by such
                                 Commercial Bank.

PARENT COMPANIES:                collectively, PDC, SMM, SC and BVN.

PARTIAL COMPLETION:              for purposes of the Completion Guarantee, the
                                 partial completion of the Sulfide Project which
                                 shall occur upon the delivery by the Issuer to
                                 the Administrative Agent of (i) the
                                 certificates and other documents listed in
                                 clauses (a) and (b) of Section 2.02 of the
                                 Completion Guarantee and (ii) the Non-Variable
                                 Certificates (which certificates are those
                                 listed in clauses (c) through (h) of Section
                                 2.01 of the Completion Guarantee).

PAYING AGENT:                    the meaning given in Section 3.11 of this
                                 Indenture.

PAYMENT DATE:                    the earlier of (i) March 20 or September 20
                                 next occurring after the Commercial Production
                                 Start-Up Date and (ii) March 20, 2008, and,
                                 thereafter every March 20 and September 20,
                                 until the Maturity Date, the last day of such
                                 month, provided that if any such date shall
                                 fall on a day that is not a Business Day, the
                                 relevant Payment Date shall be the immediately
                                 succeeding Business Day and the Bondholders
                                 shall not be entitled to any interest on
                                 account of such delay in payment, or if the
                                 Senior




                                       19



                              
                                 Facility Loans have been fully repaid, such
                                 other days as set forth in applicable
                                 Supplemental Indenture.

PAYMENT DEFAULT:                 the meaning given in Section 8.01(a) of this
                                 Indenture.

PAYMENT DEFAULT CURE PERIOD:     the meaning given in Section 8.02(b) of this
                                 Indenture.

PAYMENT EVENT OF DEFAULT:        the meaning given in Section 8.02(b) of this
                                 Indenture.

PD CATHODES SALES AGREEMENT:     that certain Cathodes Sales Agreement, dated as
                                 of September 30, 2005, between the Issuer and
                                 PD Sales Company.

PD CONCENTRATE SALES             that certain Concentrate Sales Agreement, dated
AGREEMENT:                       September 30, 2005, between the Issuer and PD
                                 Sales Company.

PDC:                             Phelps Dodge Corporation

PDC GUARANTEE:                   that certain Parent Company Guarantee, dated of
                                 September 30, 2005, entered into by PDC for the
                                 benefit of the Issuer, pursuant to which PDC
                                 has agreed to guarantee the obligations of PD
                                 Sales Company under the PD Concentrate Sales
                                 Agreement and the obligations of PD Sales
                                 Company under the PD Cathodes Sales Agreement.

PD SALES COMPANY:                Phelps Dodge Sales Company Incorporated.

PERMITTED INVESTMENT:            with respect to all Accounts, any of the
                                 following (denominated in Dollars in the case
                                 of the Proceeds Account, the Onshore Dollars
                                 Account and the Operating Onshore Dollars
                                 Account and denominated in Nuevos Soles in the
                                 case of the Onshore Nuevos Soles Account and
                                 the Onshore Operating Nuevos Soles Account):

                                 (i)  obligations maturing or capable of
                                      redemption by the holder not more




                                       20



                              
                                      than six months after the date of
                                      acquisition thereof and issued or
                                      guaranteed by any government, governmental
                                      agency or international organization
                                      similar obligations of which have one of
                                      the two highest ratings from a credit
                                      rating agency of international standing;

                                 (ii) demand deposits, time deposits,
                                      certificates of deposit or other
                                      obligations (including acceptances)
                                      maturing or capable of redemption by the
                                      holder not more than six months after the
                                      date of investment or acquisition thereof
                                      which are issued, accepted or guaranteed
                                      by a bank having capital funds and
                                      reserves of not less than
                                      U.S.$1,000,000,000 (or the Equivalent) and
                                      a rating (as most recently published) on
                                      its outstanding senior long-term
                                      unsecured, unguaranteed indebtedness of A
                                      or higher by Standard & Poor's and A2 or
                                      higher by Moody's;

                                 (iii) commercial paper, corporate promissory
                                      notes or other obligations maturing or
                                      capable of redemption by the holder not
                                      more than six months after the date of
                                      acquisition thereof which (A) have, or are
                                      supported by an unconditional guarantee
                                      from a corporation similar obligations of
                                      which have, one of the two highest ratings
                                      from a credit rating agency of
                                      international standing, or (B) are
                                      obligations which are supported by an
                                      unconditional guarantee or letter of
                                      credit from any bank referred to in clause
                                      (ii) above;

                                 (iv) repurchase agreements fully collateralized
                                      by Permitted Investments of the type
                                      described in clauses (i), (ii) and (iii)
                                      above, provided that the Permitted
                                      Investments that collateralize




                                       21



                              
                                      such repurchase agreements may mature or
                                      be capable of redemption by the holder
                                      more than six months after the date of
                                      investment or acquisition thereof;

                                 (v)  any other investments so long as the
                                      Issuer notifies in writing the
                                      Administrative Agent of the proposed
                                      investment, and the Administrative Agent,
                                      acting pursuant to instructions from the
                                      Supermajority Lenders, consents to such
                                      proposal; and

                                 (vi) money market funds [capable of redemption
                                      at any time] having a rating in the
                                      highest investment category granted
                                      thereby by a recognized credit rating
                                      agency at the time of acquisition,
                                      including any fund for which the Trustee
                                      or the Offshore Collateral Agent or an
                                      Affiliate of the Trustee or the Offshore
                                      Collateral Agent serves as an investment
                                      advisor, administrator, shareholder
                                      servicing agent, custodian or
                                      subcustodian, notwithstanding that (A) the
                                      Trustee or the Offshore Collateral Agent
                                      or an Affiliate of the Trustee or the
                                      Offshore Collateral Agent charges and
                                      collects fees and expenses from such funds
                                      for services rendered (provided that such
                                      charges, fees and expenses are on terms
                                      consistent with terms negotiated at arm's
                                      length) and (B) the Trustee or the
                                      Offshore Collateral Agent charges and
                                      collects fees and expenses for services
                                      rendered, pursuant to this Agreement.

PERMITTED LIENS:                 the meaning given in Section 5.01(f) of this
                                 Indenture.




                                       22



                              
PERSON:                          any individual, corporation, partnership, joint
                                 venture, association, joint stock company,
                                 trust, unincorporated organization or
                                 government agency or political subdivision
                                 thereof.

PERUVIAN GAAP:                   generally accepted accounting principles in
                                 Peru as in effect from time to time.

PLACEMENT DATE:                  the meaning given in Section 3.07 of this
                                 Indenture.

PLACING AGENT:                   the meaning given in Section 3.01 of this
                                 Indenture.

PORT SERVICES AGREEMENT:         the Port Services Agreement, dated December 31,
                                 2004, between the Issuer and Terminal
                                 Internacional del Sur S.A.

POWER SUPPLY AGREEMENTS:         (i) the Power Supply Agreement (110 MW), dated
                                 December 31, 2004, between the Issuer and
                                 ElectroPeru S.A., (ii) the Power Supply
                                 Agreement (46 MW), dated December 31, 2004,
                                 between the Issuer and ElectroPeru S.A., and
                                 (iii) the Power Supply Agreement, dated
                                 December 29, 2004, between the Issuer and
                                 Empresa de Generacion Electrica de Arequipa
                                 S.A. - EGASA.

PRICING SUPPLEMENT:              the informative pricing supplement relating to
                                 a specific Issue within the framework of the
                                 Program, as amended, modified, restated or
                                 supplemented from time to time.

PRINCIPAL PAYMENT:               the meaning given in Section 3.19(b) of this
                                 Indenture.

PRIVATE ISSUE:                   the meaning given in Section 3.15(a) of this
                                 Indenture.

PROCEEDS ACCOUNT:                the account established pursuant to Section
                                 4.01(a)(i) of the Master Security Agreement.

PROGRAM:                         the program of Bonds issued pursuant to this
                                 Indenture and the applicable




                                       23



                              
                                 Supplemental Indentures, which shall be known
                                 as ["Sociedad Minera Cerro Verde S.A.A. First
                                 Bonds Program"]

PROGRAM AMOUNT:                  the meaning given in Section 3.14 of this
                                 Indenture.

PROJECT COSTS:                   all costs and expenses to be incurred by the
                                 Issuer to finance and complete the Sulfide
                                 Project, including, without limitation, all
                                 costs and expenses incurred in connection with
                                 the design, equipment procurement,
                                 installation, construction and start-up of the
                                 Sulfide Project, the grant to the Issuer of the
                                 Governmental Approvals and all other easements,
                                 licenses and other real property rights and
                                 interests required for the Sulfide Project,
                                 acquisition of an inventory of initial
                                 supplies, Ancillary Capital Expenditures
                                 required to complete ancillary projects
                                 necessary for the completion or operation of
                                 the Sulfide Project, initial working capital,
                                 interest during construction, initial funding
                                 of the Senior Debt Service Reserve Sub-Account,
                                 Extraordinary Major Maintenance Reserve
                                 Sub-Account, Tax Contingency Reserve
                                 Sub-Account and Power Generator Reserve
                                 Sub-Account (as each such account is defined in
                                 the Master Security Agreement) and stamp
                                 duties.

PROJECT DOCUMENTS:               collectively, the Closing Project Documents and
                                 any other agreement material to the operations
                                 of the Sulfide Project that is entered into
                                 after the Closing Date.

PROJECT PROPERTY:                all Property of the Issuer, whether now owned
                                 or hereafter acquired, and wherever located
                                 (other than any interest of the Issuer in the
                                 Accounts).

PROMISSORY NOTE:                 each promissory note executed and delivered by
                                 the Issuer on each Disbursement Date in favor
                                 of each Senior




                                       24



                              
                                 Facility Lender making an Advance on such date.

PROPERTY:                        any rights or interest in, to or under property
                                 of any kind whatsoever, whether real, personal
                                 or mixed and whether tangible or intangible.

RBS:                             the meaning given in the recitals to this
                                 Indenture.

RBS LENDER:                      RBS or any assignee of RBS that (i) has
                                 purchased Senior Facility Loans in excess of
                                 U.S.$10 million and (ii) has been designated by
                                 RBS, or the immediate predecessor RBS Lender,
                                 by written notice to the Administrative Agent
                                 and the Issuer as the RBS Lender.

REDEMPTION PRICE:                the meaning given in Section 3.16(a) of this
                                 Indenture.

REPLACEMENT DEBT:                Indebtedness of the Issuer, the proceeds of
                                 which are used to prepay any of the Senior
                                 Loans.

REPLACEMENT LENDERS:             Any lender that has entered into a Replacement
                                 Loan Agreement with the Issuer.

REPLACEMENT LOAN AGREEMENT:      a loan agreement (w) which is entered into on
                                 terms and conditions no less favorable to the
                                 Issuer than the terms and conditions of the
                                 Senior Facility Loan Agreement under which the
                                 Commitment has been suspended or terminated,
                                 (x) which provides for payment of principal and
                                 interest on the same dates as principal and
                                 interest are payable under the Senior Facility
                                 Loan Agreement under which the Commitment has
                                 been suspended or terminated (y) does not
                                 mature earlier than the Maturity Date and (z)
                                 which shall be secured on a pari passu basis
                                 with the other Senior Facility Loan Agreements
                                 but which shall not entitle the lender
                                 thereunder (or holder of loans thereunder) to
                                 any voting rights so long as such lender




                                       25



                              
                                 or holder is a Parent Company or an Affiliate
                                 thereof.

RESUMPTION CERTIFICATE           The meaning given in Section 8.05 of this
                                 Indenture.

SALES AGREEMENT:                 a contract or agreement entered into by or on
                                 behalf of the Issuer for the sale or other
                                 disposition of Concentrates, Cathodes or other
                                 products produced by the Sulfide Project or the
                                 Current Operations.

SC:                              Sumitomo Corporation

SCOTIA CAPITAL:                  the meaning given in the recitals to this
                                 Indenture.

SCOTIA CAPITAL LENDER:           Scotia Capital or any assignee of Scotia
                                 Capital that (i) has purchased Senior Facility
                                 Loans in excess of U.S.$10 million and (ii) has
                                 been designated by Scotia Capital, or the
                                 immediate predecessor Scotia Capital Lender, by
                                 written notice to the Administrative Agent and
                                 the Issuer as the Scotia Capital Lender.

SECURED PARTIES:                 The Senior Lenders, the Trustee, the Onshore
                                 Collateral Agent, the Offshore Collateral
                                 Agent, the Administrative Agent, and the JBIC
                                 Agent under the JBIC Loan Agreement.

SECURITIES MARKET LAW:           Consolidated Text of the Securities Market Law
                                 (Texto Unico Ordenado de la Ley del Mercado de
                                 Valores) approved by Supreme Decree
                                 093-2002-EF/94.10, as amended.

SECURITY DOCUMENTS:              the Onshore Security Documents and the Offshore
                                 Security Documents.

SENIOR FACILITY LENDERS:         any of JBIC, KfW Lender, Calyon Lender, RBS
                                 Lender, Scotia Capital Lender and Mizhuo
                                 Lender.

SENIOR FACILITY LENDERS          the Master Participation Agreement, each Senior
FINANCING                        Facility Loan Agreement, each




                                       26



                              
DOCUMENTS:                       Promissory Note, and the Transfer Restrictions
                                 Agreement.

SENIOR FACILITY LENDERS VOTE:    a vote cast by the Senior Facility Lenders in
                                 accordance with Section 6.09 of the Master
                                 Security Agreement, it being understood that
                                 the JBIC shall have 3 Senior Facility Lenders
                                 Votes and each other Senior Facility Lender
                                 shall have one Senior Facility Lenders Vote.

SENIOR FACILITY LOAN             collectively the Commercial Banks Loan
AGREEMENTS:                      Agreement, the JBIC Loan Agreement and the KfW
                                 Loan Agreement.

SENIOR FACILITY LOANS:           loans provided to the Issuer by the Senior
                                 Facility Lenders pursuant to various Senior
                                 Facility Loan Agreements, together with any
                                 Replacement Debt.

SENIOR FACILITY LOAN             the obligations to pay the principal of and
OBLIGATIONS:                     interest on the Senior Facility Loans,
                                 including any interest accruing after the
                                 filing of a petition in bankruptcy or the
                                 commencement of any insolvency or bankruptcy
                                 proceedings with respect to the Issuer, and all
                                 commissions, fees, indemnities and other
                                 amounts payable to the Senior Facility Lenders
                                 under the Master Participation Agreement and
                                 their respective Senior Facility Loan
                                 Agreements.

SENIOR LENDERS:                  prior to an issuance of Peruvian Bonds, each
                                 Senior Facility Lender and after an issuance of
                                 Bonds, collectively, each Senior Facility
                                 Lender and, collectively, the Bondholders, it
                                 being understood that the Bondholders shall
                                 collectively count as only one Senior Lender.

SENIOR LENDERS FINANCING         the Completion Guarantee and each Security
DOCUMENTS:                       Document.

SENIOR LENDERS VOTE:             a vote cast by the Senior Lenders in accordance
                                 with Section 6.09 of the Master Security
                                 Agreement.




                                       27



                              
SENIOR LOANS:                    prior to an issuance of the Bonds, the Senior
                                 Facility Loans and, after an issuance of the
                                 Bonds, collectively, the Senior Facility Loans
                                 and the Bonds.

SENIOR LOAN OBLIGATIONS:         the Senior Facility Loan Obligations and the
                                 Bonds Obligations.

SERIES:                          one or more series of Bonds that are part of a
                                 single Issue.

SHAREHOLDER:                     any of the Sumitomo Participant, CCMC, and BVN.

SHAREHOLDERS' EQUITY:            at any date, the subscribed and paid-in capital
                                 stock plus legal reserves, other reserves and
                                 retained earnings plus Subordinated Loans, if
                                 any, as reported in the consolidated balance
                                 sheet of the Issuer as of such date determined
                                 in accordance with Peruvian GAAP and as set
                                 forth in the Issuer's most recent quarterly or
                                 annual financial statements, as applicable.

SHAREHOLDERS' PARENTS:           any of PDC, SMM and SC.

SMBC:                            the meaning given in the recitals to this
                                 Indenture.

SMCV SHARES:                     the shares of the Issuer held by or on behalf
                                 of the Shareholders at any time.

SMM:                             Sumitomo Metal Mining Co., Ltd.

SMM CONCENTRATE SALES            that certain Concentrate Sales Agreement, dated
AGREEMENT:                       June 1, 2005, between the Issuer and SMM, as
                                 amended on the date of the signing of the
                                 Master Security Agreement.

SPECIAL MEETING:                 any meeting of the Bondholders of a specific
                                 Issue as provided in Article X of this
                                 Indenture.

STABILITY AGREEMENT:             the agreement executed by and between the
                                 Issuer and the Ministry of Energy and Mines and
                                 dated as of February 13, 1998, pursuant to
                                 which the Peruvian State




                                       28



                              
                                 granted in favor of the Issuer a Contract of
                                 Guarantees and Investment Promotion Measures
                                 stabilizing certain legal matters until its
                                 expiration on December 31, 2013.

STAND-BY ADVANCE:                Any subsequent advance to the Base Advances up
                                 to the aggregate Base Committed Amount by the
                                 Commercial Banks pursuant to the Commercial
                                 Banks Loan Agreement.

STAND-BY COMMITTED AMOUNT:       with respect to each Commercial Bank, the
                                 amount set forth opposite its name on Schedule
                                 A hereto, in the column titled "Stand-By
                                 Committed Amounts," as such amount may be
                                 adjusted from time to time.

STRUCTURING ENTITY:              the meaning given in the preamble to this
                                 Indenture.

SUB-ACCOUNTS:                    the meaning given in Section 4.01(b) of the
                                 Master Security Agreement.

SUBORDINATED LENDER:             a Person making a Subordinated Loan to the
                                 Issuer.

SUBORDINATED LOAN:               unsecured indebtedness of the Issuer to a
                                 Subordinated Lender, whether presently
                                 outstanding or hereafter created, incurred or
                                 assumed, that is subordinated to the Senior
                                 Loans in accordance with the "Terms of
                                 Subordination" as attached to the Completion
                                 Guarantee.

SUCCESSOR REPRESENTATIVE:        the meaning given in Section 9.10(d) of this
                                 Indenture.

SULFIDE PROJECT:                 the meaning given in the recitals to this
                                 Indenture.

SUMITOMO PARTICIPANT:            SMM Cerro Verde Netherlands B.V.

SUPERMAJORITY LENDERS:           with respect to any vote or decision to be made
                                 by Senior Lenders, (i) before the Availability
                                 Period End Date, a vote or decision made by (x)
                                 Senior Lenders with, in the case of Senior
                                 Facility Lenders, a




                                       29



                              
                                 cumulative Aggregate Committed Amount and, in
                                 the case of Peruvian Bondholders, an Aggregate
                                 Issued Bond Amount greater than 662/3% of the
                                 sum of the cumulative Aggregate Committed
                                 Amount of all Senior Facility Lenders and the
                                 Aggregate Issued Amount of all Peruvian Bonds
                                 and (y) at least 6 Senior Lenders Votes (or,
                                 prior to an issuance of Peruvian Bonds, 5
                                 Senior Facility Lenders Votes); and (ii) after
                                 the Availability Period End Date, a vote or
                                 decision made by (x) Senior Lenders holding
                                 Senior Loans with an Outstanding Advance Amount
                                 greater than 662/3% of the Outstanding Advance
                                 Amount of the Senior Loans held by all Senior
                                 Lenders and (y) at least 6 Senior Lenders Votes
                                 (or, prior to an issuance of Peruvian Bonds, 5
                                 Senior Facility Lenders Votes).

SUPPLEMENTAL INDENTURE:          any supplement to this Indenture entered into
                                 by the Issuer and the Common Representative
                                 whereby the specific terms and conditions of a
                                 Bond Issue shall be set forth.

SUSTAINING CAPITAL COSTS:        at any time, the capital expenditures
                                 (including repairs and replacement funded by
                                 Insurance proceeds) of the Issuer required, in
                                 the opinion of the Issuer, to maintain its
                                 business operating at or near its design
                                 capacity.

TERM:                            the meaning given in Section 3.17 of this
                                 Indenture.

TOTAL LOSS:                      The actual total loss of the Business or any
                                 event which short of actual total loss is
                                 deemed by the Issuer's insurance carriers to be
                                 a total loss of the Business for purposes of
                                 paying claims under its property and casualty
                                 policies.

TRANSFER RESTRICTIONS            the Transfer Restrictions Agreement, dated as
AGREEMENT:                       of September 30, 2005, among the Sumitomo
                                 Participant, BVN, CCMC,




                                       30



                              
                                 SMM, SC, PDC, the Senior Facility Lenders and
                                 the Administrative Agent.

TRUSTEE:                         the meaning given in the recitals to this
                                 Indenture.

UNITED STATES:                   the United States of America

UNITED STATES GAAP:              generally accepted accounting principles in the
                                 United States as in effect from time to time.

WAR:                             war (declared or undeclared), civil war,
                                 revolution, insurrection, civil strife or
                                 terrorism (other than any such acts undertaken
                                 primarily to achieve labor or student
                                 objectives) in Peru which directly and
                                 proximately causes (i) cessation of
                                 substantially all construction or operation of
                                 the Sulfide Project for a period of at least 30
                                 consecutive days and renders it unreasonable or
                                 impossible without unreasonable risk of
                                 physical harm to Sulfide Project workers at the
                                 Sulfide Project site to resume significant
                                 construction or operation activities at the
                                 Sulfide Project or (ii) damage to or
                                 destruction of the Project Property to such
                                 extent that it would be unreasonable for the
                                 Issuer to proceed to completion of the Sulfide
                                 Project.




                                       31



                                   ARTICLE II

                            PURPOSE OF THE INDENTURE

     Section 2.01 Purpose. The purpose of this Indenture is to set forth the
general terms and conditions of the Bonds, as well as the rights and duties of
the Issuer and the Bondholders, in accordance with the provisions of the
Securities Market Law, the General Corporate Law and other Applicable Law.
Through the execution of this Indenture and the applicable Supplemental
Indenture by the Common Representative, the Bondholders will adhere to, and
ratify each and every term and condition of this Indenture and the applicable
Supplemental Indenture.

                                   ARTICLE III

                   GENERAL TERMS AND CONDITIONS OF THE PROGRAM

     Section 3.01 Placing Agent. __ shall act as placing agent with respect to
all Issues (the "PLACING AGENT").

     Section 3.02 Class. The Bonds shall be registered, unseverable and freely
transferable, and will be represented by book entries in the accounting record
kept by CAVALI ICLV S.A. ("CAVALI"), a securities clearing entity duly
authorized by CONASEV. Nonetheless, should the Bonds be placed through a private
offering under article 5 of the Securities Market Law, it is understood that the
Bonds shall be subject to the transfer restrictions provided for therein.

     Section 3.03 Co-Ownership. In the case of co-ownership of the Bonds, the
co-owners will agree on a single person to exercise the rights as Bondholder on
behalf of all co-owners of such Bonds and will provide written notice thereof to
the Issuer, signed by co-owners representing more than 50% of the co-owners and
authenticated by a notary public; provided that all co-owners of such Bonds
shall be jointly liable to the Issuer for any obligations arising from their
capacity as Bondholders.

     Section 3.04 Issuance Costs. All costs related to the issuance of each
Issue shall be borne by the Issuer.

     Section 3.05 Use of Proceeds. The Issuer shall use the proceeds of the
Bonds as set forth under applicable Supplemental Indenture.

     Section 3.06 Issues and Series. (a) The Bonds shall be issued in one or
more Issues. Each Issue may consist of one or more Series of Bonds.

     (b) All Bonds shall rank pari passu with the other Senior Loans without any
preference to the other Senior Loans by reason of date of incurrence, currency
of repayment or otherwise. Except as set forth in the preceding sentence, the
Bonds are neither qualified nor subordinated in relation to other obligations of
the Issuer.


                                       32



     (c) As permitted by Section 309 of the General Corporate Law, each Issue,
and each Series within a specific Issue, shall rank pari passu among all
Bondholders regardless of Issue and Series. Therefore, in the case of the
winding up of the Issuer, no Bondholder shall have pre-emptive rights, and each
Bondholder shall rank pari passu among all Bondholders regardless of Issue and
Series.

     Section 3.07 Placement Date. The placement date of a specific Issue or
Series (the "PLACEMENT DATE") shall be set as provided in the applicable
Supplemental Indenture, Pricing Supplement and/or public offering notice. The
Placement Date of such Issue or Series shall be communicated publicly pursuant
to the applicable public offering notice.

     Section 3.08 Issue Date. The issue date of a specific Issue or Series (the
"ISSUE DATE") shall be set as provided in the applicable Supplemental Indenture,
Pricing Supplement and/or public offering notice. The Issue Date of such Issue
or Series shall be communicated publicly pursuant to the applicable public
offering notice.

     Section 3.09 Collateral. On the date of the execution of the Supplemental
Indenture relating to the first Issue under the Program, as security for the
Issuer's obligations under this Indenture and the applicable Supplemental
Indenture, the Common Representative, the Issuer and the Administrative Agent
shall enter into a conditional accession agreement (the "NEW PARTY ACCESSION
AGREEMENT"). The New Party Accession Agreement shall become effective upon the
Issue Date of the first Issue whereupon the Common Representative shall become a
party to the Completion Guarantee and the Master Security Agreement, and the
Common Representative, and the Bondholders, collectively and through the Common
Representative, shall have all of the rights and obligations of, respectively,
the Common Representative and a Senior Lender under, respectively, the
Completion Guarantee and the Master Security Agreement.

     Section 3.10 Applicable Law. Each Issue shall be governed by Applicable
Law.

     Section 3.11 Place of Payment and Paying Agent. (a) Payments of interest
and redemption of principal on the Bonds shall be made through CAVALI which
shall act as paying agent (the "PAYING AGENT"), and shall be made with such
funds as the Issuer shall provide from time to time; provided that the Issuer
shall have the right to appoint a replacement paying agent with respect to a
specific Issue pursuant to a Supplemental Indenture and/or the public offering
notice.

     (b) The Paying Agent, and any other paying agent appointed by the Issuer as
provided above, shall not be liable to the Bondholders or the Common
Representative nor shall it be under any obligation to make any payment with its
own resources to the Bondholders or the Common Representative in the event that,
notwithstanding a demand for payment, the Issuer fails to provide such funds as
set forth in the pertaining agreement to be entered by and between the Issuer
and the Paying Agent (or any replacement paying agent).

     Section 3.12 Secondary Market. The Bonds may be traded on the Lima Stock
Exchange and/or any other centralized trading mechanism, as established in the
applicable Supplemental Indenture and/or Pricing Supplement.


                                       33



     Section 3.13 Currency. The Bonds shall be issued in Dollars. Payment of
principal and interest on the Bonds shall be made in Dollars.

     Section 3.14 Program Amount. The Issuer may issue Bonds under the Program
with an aggregate principal amount not to exceed [U.S.$250,000,000.00 (two
hundred and fifty million and 00/100 Dollars)] (the "PROGRAM AMOUNT"), which
amount may be increased by the agreement of the Issuer, the Common
Representative and the Structuring Entity, without the consent of the
Bondholders, any General Meeting or any Special Meeting.

     Section 3.15 Private Offering. (a) Without prejudice to the provisions of
this Indenture, the Issuer, in its sole discretion, may place one or more Issues
through private offerings (each such placement, a "PRIVATE ISSUE"); provided
that the aggregate principal amount of any Bonds issued pursuant to a Private
Issue shall be counted towards the Program Amount described above.

     (b) The terms and conditions of any such Private Issue shall be governed by
the specific terms and conditions set forth in this Indenture and the
Supplemental Indenture relating to such Private Issue.

     Section 3.16 Optional Redemption. The Bonds are subject to the following
redemption options:

     (a) Early Redemption. The Issuer shall have the right, in its sole
discretion, to redeem the outstanding Bonds, in whole or in part (an "EARLY
REDEMPTION"), on any date (the "EARLY REDEMPTION DATE") at a price (the
"REDEMPTION PRICE") equal to the sum of:

          (i) the aggregate outstanding principal amount of the Bonds as of the
     Early Redemption Date; and

          (ii) accrued and unpaid interest on the outstanding principal amount
     of the Bonds as of the Early Redemption Date.

     No prepayment premium or penalty shall be due and payable in connection
with an Early Redemption unless such Early Redemption is financed with the
proceeds of replacement debt obtained (either at the time or within a period of
one year from such Early Redemption Date) from a Person other than the Parent
Companies or an Affiliate of the Parent Companies, in which case a prepayment
premium shall be payable as provided in the Supplemental Indenture entered into
in connection with the Bonds so redeemed.

     Notwithstanding the foregoing, installments of interest on the Bonds that
are due and payable on interest payment dates that fall on the Early Redemption
Date shall be payable to the Bondholders as provided in this Indenture, the
applicable Supplemental Indentures and Applicable Law.

     Notice of any Early Redemption described herein shall be published in "El
Peruano" at least thirty (30) Business Days but not more than sixty (60)
Business Days prior to the Early Redemption Date.


                                       34



     Unless the Issuer defaults in payment of the Redemption Price, interest
will cease to accrue on the Bonds on such Early Redemption Date.

     In the event of an Early Redemption, all Bondholders shall be treated
equally and shall receive their respective pro rata portion of the Redemption
Price, and payment of the Redemption Price shall be made through the Paying
Agent or such other paying agent as the Issuer may appoint in the applicable
Supplemental Indenture and/or the public offering notice.

     (b) Redemption under the General Corporate Law. The Issuer may redeem the
Bonds in any of the circumstances contemplated within Section 330 of the General
Corporate Law. In the case of such a redemption, Section 89 of the Securities
Market Law shall also apply.

     (c) Additional Redemption Option. The Issuer may also redeem the Bonds in
other circumstances if so provided in the applicable Supplemental Indentures and
Pricing Supplements, in the form and within the time limits provided therein. In
the case of such a redemption, Section 89 of the Securities Market Law shall
also apply.

     Section 3.17 Term of the Program. The term (the "TERM") of the Program
shall be the period of two (2) years from the listing thereof in the Public
Register of the Securities Market of CONASEV. The Issuer and the Structuring
Entity may, without the consent of the Bondholders, extend the Term for similar
periods.

     Section 3.18 Placement Price. The Bonds may be placed at, below or over
the par value thereof as provided in the applicable Supplemental Indenture
and/or Pricing Supplement.

     Section 3.19 Redemption of the Bonds and Payments of Principal. (a) The
maturity date of the Bonds (the "MATURITY Date") shall be set forth in the
applicable Supplemental Indenture.

     (b) All payments with respect to amounts of principal due with respect to a
specific Issue (each such payment, a "PRINCIPAL PAYMENT") shall be made on the
applicable Payment Date. All Principal Payments shall be made through the Paying
Agent or such other paying agent as the Issuer may appoint in the applicable
Supplemental Indenture and/or the public offering notice. All Bondholders of a
specific Issue shall be treated equally with respect to the Principal Payments
and shall receive their respective pro rata portion of such Principal Payments.

     Section 3.20 Common Representative. There shall be a single Common
Representative representing all Issues.

     Section 3.21 Placement of Issues. The date, time and time limits relating
to the placement of each Issue or Series shall be set forth in the applicable
Supplemental Indenture, Pricing Supplement and/or public offering notice.


                                       35



     Section 3.22 Interest Rate. (a) The applicable interest rate for a
specific Issue and/or Series (the "INTEREST RATE") may be fixed, variable or
associated with the evolution of any indicator, and shall be determined prior to
the applicable Issue Date in accordance with the placement process described in
the Offering Circular or the additional information included in the applicable
Supplemental Indenture, Pricing Supplement or public offering notice.

     (b) The Interest Rate for a specific Issue and/or Series, together with
provisions for the payment of accrued interest (each such payment, an "INTEREST
PAYMENT"), shall be set forth in the applicable Supplemental Indenture, Pricing
Supplement and/or public offering notice.

     (c) The date of each Interest Payment (the "INTEREST PAYMENT DATE") shall
be set forth in the applicable Supplemental Indenture. In the event that the
date on which an Interest Payment is due is not a Business Day, the Issuer shall
make such Interest Payment on the immediately succeeding Business Day and the
Bondholders shall not be entitled to any interest on account of such delay in
payment.

     Section 3.23 Face Amount of the Bonds. The face amount of each Bond shall
be set forth in the applicable Supplemental Indenture, Pricing Supplement and/or
public offering notice.

     Section 3.24 Commercial Production Start-up Date. The Issuer shall notify
the Common Representative of the date as of which, in its judgment, it has
achieved start of commercial production of the Sulfide Project (the "COMMERCIAL
PRODUCTION START-UP DATE"); provided that such date shall be same date as the
date notified by the Issuer to the Senior Facility Lenders for purposes of
determining the date of payment of principal of the Senior Facility Loans.

     Section 3.25 Other Terms and Conditions. The terms and conditions set forth
herein shall apply to each Issue and Series thereof. The specific terms and
conditions relating to each Issue that are not set forth in this Indenture shall
be set forth in the applicable Supplemental Indenture, Pricing Supplement and/or
public offering notice.

                                   ARTICLE IV

                          OBLIGATIONS OF THE ISSUER(19)

     Section 4.01 Obligations of the Issuer. Without prejudice to the
obligations set forth in the Securities Market Law, the regulations on the
primary public offering and the sale of securities (Reglamento de Oferta Publica
Primaria y de Venta de Valores Mobiliarios), approved by CONASEV Resolution No
141-98-EF/94.10, as amended, and

- ----------
(19) Note: provisions in brackets below will only be included if the relevant
     provision is required for marketing purpose or by applicable laws or
     regulations.


                                       36



other Applicable Law, the Issuer undertakes the following obligations to the
Bondholders of a specific Issue, unless otherwise authorized by a Special
Meeting of any specific Issue:

     (a) Make Principal Payments and Interest Payments on the Bonds as they
become due and payable.

     (b) (i) Verify that all information (A) disclosed in this Indenture, the
Offering Circular, the applicable Supplemental Indenture and Pricing Supplement,
and (B) delivered to CONASEV and/or the Common Representative with respect to a
specific Issue is true and correct and that all such information is disclosed
and/or delivered in a clear and timely fashion.

          (ii) With respect to information relating to the Program and/or the
     Issuer, disclose any and all relevant information that is required to be
     disclosed by and in accordance with Applicable Law, except for information
     that qualifies as "reserved information" under Applicable Law and is
     disclosed as such to CONASEV.

          (iii) The information disclosed by the Issuer should not be construed
     as a recommendation or suggestion for potential investors aimed to
     interfere in their respective investment decisions.

     (c) Provide the Common Representative with copies of all information
submitted to CONASEV within the [five (5)] Business DAYS following the date on
which the Issuer delivers such information to CONASEV; provided that the Issuer
shall be under no obligation to provide the Common Representative with copies of
information submitted to CONASEV in accordance with this Section 4.01(c) to the
extent that the Issuer classifies such information as "reserved" in accordance
with Applicable Law.

     (d) Provide such additional information relating to the performance of its
material obligations with respect to a specific Issue as a Special Meeting,
General Meeting or the Common Representative, on behalf of the applicable Issue,
may reasonably request in writing. Such information shall be delivered within
[thirty (30)] Business Days following any such request, unless the provision of
such information by the Issuer is forbidden or protected by Applicable Law, or
may damage the Issuer.

     (e) In the event that one or more creditors of the Issuer file a petition
for the Issuer to be declared insolvent or in situacion de concurso under the
General Bankruptcy System Law (Ley General del Sistema Concursal), Law No.
27809, or under any such provision as may replace the aforementioned law, the
Issuer shall, upon notification of the filing of such a petition, notify the
Common Representative of such petition and keep it reasonably informed of
developments relating to such petition.

     (f) Within three (3) Business Days from the end of each calendar trimester,
the Issuer shall deliver a certificate to the Common Representative certifying
that, to the best of its knowledge, no Default or Event of Default has occurred
with respect to a specific Issue.

     (g) Comply in all material respects with all Applicable Laws, including
required Governmental Approvals, rules, regulations and orders of Peru and each
other applicable


                                       37



jurisdiction, unless the necessity of compliance therewith is contested in good
faith by appropriate proceedings, and with respect to which adequate accounting
reserves have been established and maintained by the Issuer in accordance with
United States GAAP with respect thereto.

     (h) Pay and discharge, before the same shall become delinquent, all taxes,
assessments and governmental charges or levies lawfully imposed on it or its
property (including interest and penalties) pursuant to Applicable Law, unless
such taxes, assessments, governmental charges or levies are contested in good
faith and by appropriate proceedings and adequate accounting reserves are
established by the Issuer in accordance with United States GAAP with respect
thereto.

     (i) Permit the compliance by the Common Representative with its obligations
under this Indenture and the Supplemental Indentures, if applicable, and respect
the powers and duties vested in the Common Representative.

     (j) Sell (i) the volumes of Concentrate and Cathodes, as the case may be,
covered in the Offtake Agreements at the prices stipulated therein, and (ii) the
balance of its production of Concentrate and Cathodes in U.S.$ at market prices,
and cause all proceeds arising from the Offtake Agreements or from other sales
of Concentrate or Cathodes to be paid directly to the Trustee for deposit to the
Proceeds Account or, in the case of Domestic Sales, to the Issuer for deposit to
the Onshore Dollars Account.

     (k) Not enter into any material transactions except in the ordinary course
of business, on ordinary commercial terms and on the basis of arms' length
arrangements, provided that neither this covenant nor Section 4.01(r) shall
limit the Issuer's ability to transfer (including, without limitation, by way of
donation) its co-ownership interest in the Pillones Dam to any third party so
long as the water rights of the Issuer for the Current Operations and the
Sulfide Project are unaffected by such transfer; and provided further that the
transactions undertaken pursuant to any Identified Material Project Document
with a Parent Company shall be deemed to meet the standard in this clause (k).

     (l) As required by Section 319 of the General Corporate Law, pay the
expenses of the Bondholder syndicate of a specific Issue up to a limit of two
percent (2.0%) of the annual Interest Rate of the applicable Issue and/or Series
(the "EXPENSE CAP"); provided that any expenses incurred for the benefit of all
Issues, including expenses incurred in connection with a General Meeting, shall
be distributed pro rata among each Issue for the purpose of calculating the
Expense Cap.

     (m) [All transactions between the Issuer and any of its Affiliates shall be
on commercially reasonable terms that are at least as favorable to the Issuer as
those which might be obtained in an arm's length transaction with a Person that
is not an Affiliate, it being agreed that all Closing Project Documents between
the Issuer and any of its Affiliates (excluding changes thereto or negotiation
of variable provisions thereunder after the date hereof) are deemed to meet this
standard.]

     (n) [The Issuer shall at all times (either directly or through one or
several global insurance policies maintained by one or several of its
Affiliates) maintain property and


                                       38



casualty insurance coverage with respect to the Project Property, of an
insurable nature and of a character usually insured in such amount as are
customary for copper mines and mining facilities of similar location, type and
scale.]

     (o) [Mining Concessions.

          (i) The Issuer shall keep the Core Mining Concessions in full force
     and effect and shall, shall pay all fees and other payments payable in
     connection with the continuation therewith, defend its right, title and
     interest in, to and under the Core Mining Concessions against any adverse
     or competing claim.

          (ii) The Issuer shall keep the Mining Concessions that are not Core
     Mining Concessions in full force and effect, shall pay all fees and other
     payments payable in connection with the continuation therewith, and shall
     defend its right, title and interest in, to and under such Mining
     Concessions against any adverse or competing claim, except to the extent
     that the failure of such Mining Concession to be in full force and effect
     or the failure of the Issuer to defend its right, title and interest in, to
     and under such Mining Concessions against any adverse or competing claim
     would not be reasonably likely to have a Material Adverse Effect.]

     (p) [Notice of Defaults. The Issuer shall immediately notify the Common
Representative upon its discovery of the occurrence of any Default or Event of
Default.]

     (q) [Environmental Compliance. The Issuer shall, and shall cause all other
persons occupying the site of its Business to, in all material respects perform
its obligations and operate its Business in accordance with all Applicable
Environmental Laws.]

     (r) [Facilities. The Issuer shall maintain the facilities necessary for the
operation of the Sulfide Project and its Current Operations in good repair in
accordance with good industry mining practice.]

     (s) As of the date of execution of each Supplemental Indenture, the Issuer
shall have delivered or caused to be delivered to the Structuring Entity and the
Common Representative the following documents, each of which shall be
satisfactory to the Structuring Entity in form and substance:

          (i) Authorizations, etc. The Structuring Entity and the Common
     Representative shall have received certified copies of the organizational
     documents of the Issuer and of the actions of the board of directors or
     other governing body of the Issuer taken to authorize the execution,
     delivery and performance of the Indenture and the applicable Supplemental
     Indenture, and the performance by it of its obligations hereunder and
     thereunder.

          (ii) Incumbency and Signatures. The Structuring Entity and the Common
     Representative shall have received certificates of the Issuer in respect of
     the authority and incumbency, and containing a specimen signature, of each
     Person who has signed or will sign on its behalf the Supplemental Indenture
     or any certificate to be delivered thereunder or hereunder, or who will,
     until replaced by


                                       39



     another Person or Persons duly authorized for that purpose, otherwise act
     as representative for the purposes of signing documents in connection with
     this Indenture and the transactions contemplated hereby and thereby.

          (iii) Security Documents. The Structuring Entity and the Common
     Representative shall have received executed copies of each Security
     Document, the Master Security Agreement and the Completion Guarantee and
     each such agreement shall be in full force and effect, and all actions
     required to be taken under the Security Documents to perfect the security
     interest created thereunder shall have been taken.(20)

                                    ARTICLE V

                      RESTRICTIONS APPLICABLE TO THE ISSUER

     Section 5.01 Applicable Restrictions. Unless otherwise authorized by a
Special Meeting of a specific Issue, the Issuer shall be subject to the
following restrictions with respect to each Issue from the Issue Date of each
such Issue through the applicable Maturity Date:

     (a) In the event that a Default and/or Event of Default relating to a
specific Issue occurs and is continuing, the Issuer, unless otherwise required
by Applicable Law, shall not agree on (i) the application of profits for any
dividend distribution; (ii) the payment of dividends, whether in cash or in kind
(except for dividends resulting from the capitalization of profits or reserves);
(iii) any distribution on the Shareholders' Equity; or (iv) the purchase,
redemption or other acquisition of any shares of the Issuer or any reduction of
Shareholders' Equity; provided that this restriction does not include any
reduction of Shareholders' Equity without distribution (whether in cash or in
kind) in favor of the shareholders of the Issuer, including, without limitation,
a reduction of Shareholders' Equity that is the result of the compensation of
losses.

     (b) The Issuer shall not conduct any business other than any business
related to or incidental to the Current Operations and the Sulfide Project and
any activity contemplated in the Financing Documents, provided that the Issuer
shall have the right to conduct any other mining activity so long as (A) such
activity is conducted in the Concessions area, (B) such activity does not have a
Material Adverse Effect, (C) the Issuer observes its affirmative covenants
(including, without limitation, with respect to insurance) in relations to such
activity, (D) the Senior Lenders are given a first priority security interest in
the assets of the Issuer related to such activity, and (E) such activity is
undertaken after the Completion Release Date. This provision shall not prevent
the Issuer from entering into agreements or other arrangements with PDC or any
of its Affiliates regarding any copper concentrate leaching facilities
constructed, owned or operated by PDC or such Affiliate of PDC.

- ----------
(20) Note: Legal opinions to be described in the Supplemental Indenture.


                                       40



     (c) The Issuer shall not transfer or assign, in whole or in part, the debt
resulting from the issuance of the Bonds.

     (d) The Issuer shall not enter into any merger or consolidation with any
other entity.

     (e) The Issuer shall not make any loan or advance to any Person except for
(i) Permitted Investments, (ii) down payments and prepayments to suppliers,
(iii) loans and advances to its employees and loans to employees of the Operator
for travel, moving and household expenses of such employees and for the purchase
of land and the construction and purchase of housing for such employees, in the
ordinary course of business and in an aggregate amount not exceeding
U.S.$5,000,000 (or its Equivalent) at any one time outstanding and (iv) other
loans and advances in connection with the Business in an aggregate amount not
exceeding U.S.$10,000,000 (or its Equivalent) at any one time outstanding.

     (f) The Issuer shall not create, assume or suffer to exist any Lien upon
any of its Property, assets or contractual rights in each case whether now owned
or hereafter acquired, except for the following Liens (collectively, "PERMITTED
LIENS"):

          (i) Liens imposed by any Governmental Authority for taxes not yet due
     or which are being contested in good faith and by appropriate proceedings
     (and against which adequate accounting reserves are being maintained in
     accordance with United States GAAP);

          (ii) Liens for customs duties, relating to imported assets, owed by
     the Issuer that have been deferred in accordance with Applicable Law;

          (iii) deposits or pledges to secure the Issuer's obligations under
     workmen's compensation, social security or similar laws, or under
     unemployment insurance;

          (iv) deposits or pledges to secure bids, tenders, contracts (other
     than contracts for the payment of money), leases, statutory obligations,
     surety and appeal bonds, and other obligations of like nature arising in
     the ordinary course of business;

          (v) bankers' liens arising in the ordinary course of the Issuer's
     activities with commercial banks;

          (vi) mechanic's, workmen's, materialmen's or other like liens arising
     in the ordinary course of business with respect to obligations which are
     not due or which are being contested in good faith and by appropriate
     proceedings (and against which adequate reserves are being maintained);

          (vii) the rights of a buyer of identified goods of the Issuer pursuant
     to Section 2-501 of the Uniform Commercial Code as in effect from time to
     time in the State of New York or any other similar provision of applicable
     law;


                                       41



          (viii) easements (including easements for electric transmission lines)
     and minor imperfections of title on real estate and Concessions (other than
     the Core Mining Concessions), provided that such imperfections and
     easements do not render title unusable for purposes of the Business;

          (ix) Liens on any Property of the Issuer to which the Issuer has not
     consented and which are being contested by the Issuer in good faith and by
     appropriate proceedings or liens imposed by law (and against which adequate
     accounting reserves are being maintained in accordance with United States
     GAAP); and

          (x) Liens created pursuant to the Security Documents or otherwise for
     the benefit of the Senior Lenders, the Onshore Collateral Agent and the
     Offshore Collateral Agent.

                                   ARTICLE VI

                REPRESENTATIONS AND WARRANTIES OF THE ISSUER(21)

The Issuer represents and warrants to the Common Representative, the Structuring
Entity and the Bondholders, as of the date hereof, that:

     Section 6.01 Organization. The Issuer is a sociedad anonima abierta,
established for an indefinite term, duly incorporated, validly existing and in
good standing under the laws of the Republic of Peru. The Issuer has the
corporate power and authority to enter into and perform this Indenture, each
Supplemental Indenture and each other Senior Lenders Financing Document and to
carry out the transactions contemplated hereby and thereby; the execution and
delivery of this Indenture, each Supplemental Indenture and each other Senior
Lenders Financing Document and the consummation of the transactions contemplated
hereby and thereby have been or will have been duly authorized by all necessary
corporate action on the part of the Issuer; this Indenture, and each
Supplemental Indenture will have been, duly executed and delivered by a duly
authorized officer of the Issuer; and this Indenture and each other Senior
Lenders Financing Document constitutes, and each Supplemental Indenture will
constitute, the valid, legal and binding obligation of the Issuer, in each case
enforceable in accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of
creditors or parties to executory contracts generally and by equitable
principles of general applicability.

     Section 6.02 Information Disclosed and Provided. All of the information
disclosed in the Offering Circular and this Indenture, each Supplemental
Indenture and the applicable Pricing Supplement and all information that the
Issuer may provide to

- ----------
(21) Note: Provisions in brackets below will only be included if the relevant
     provision is required for marketing purpose or by applicable laws or
     regulations.


                                       42



CONASEV, the Bondholders and the Common Representative with respect to a
specific Issue, in each case, complies with the requirements of Applicable Law.

     Section 6.03 Legal Proceedings. Except as disclosed in the Offering
Circular and there is no action, suit, proceeding or investigation, at law or in
equity, or before any Governmental Authority or other Person, pending or, to the
best knowledge of the Issuer, threatened, against or affecting the Issuer or its
assets that (a) questions the validity of this Indenture or any Supplemental
Indenture or any action taken pursuant hereto or thereto or (b) in any case or
in the aggregate would reasonably be expected to result in a Material Adverse
Effect.

     Section 6.04 Compliance with Other Instruments and Laws.

     (a) Neither the execution and delivery of this Indenture or any
Supplemental Indenture, nor the consummation of the transactions contemplated
hereby or thereby, will result in any violation of or be in conflict with,
constitute a default under, or result in the creation of any lien, charge or
encumbrance upon any property of the Issuer pursuant to any provision of the
organizational documents of the Issuer.

     (b) Neither the execution and delivery of this Indenture or any
Supplemental Indenture, nor the consummation of the transactions contemplated
hereby or thereby, will result in any material violation of or be in material
conflict with, constitute a material default under, or result in the creation of
any lien, charge or encumbrance upon any material property of the Issuer
pursuant to any provision of any agreement, instrument, judgment, decree, order,
law or regulation applicable to the Issuer or any of its properties.

     (c) Except as disclosed in the Offering Circular, the Issuer is in material
compliance with all such provisions, agreements, instruments, judgments,
decrees, orders, laws or regulations applicable to the Issuer or any of its
properties except for any that the Issuer is disputing in good faith by
appropriate proceedings and for which the Issuer has set aside adequate
accounting reserves in accordance with United States GAAP.

     (d) Schedule 6.04 sets forth each Governmental Approval which is necessary
under Applicable Law in connection with the transactions contemplated by the
Financing Documents and the Project Documents, including any environmental
regulatory permits and approvals necessary to commence and conduct construction
and to operate the Sulfide Project and the Current Operations, but excepting
routine and non-material approvals and authorizations (each a "CORE GOVERNMENTAL
APPROVAL").

     (e) (i) the Issuer has obtained, and is in compliance with all of the terms
and requirements of, each Core Governmental Approval listed as having been made
or obtained on Schedule 6.04 and (ii) all such Core Governmental Approvals are
in full force and effect.

     Section 6.05 Taxes. Except as disclosed in Schedule 6.05 or the Offering
Circular and except for taxes being contested in good faith by appropriate
proceedings and for which the Issuer has set aside adequate accounting reserves
in accordance with United States GAAP, the Issuer has filed or caused to be
filed all tax returns required to be filed by it, and


                                       43



has paid all taxes shown to be due and payable on such returns, or on any
assessments made against it or any of its properties by written notice, and all
other taxes, assessments, fees, liabilities or other charges imposed on it or on
its properties by applicable laws or regulations, except where such failure to
file or pay, in any case or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect.

     Section 6.06 Absence of Undisclosed Liabilities. [Except as disclosed in
the Offering Circular] the Issuer has not incurred any liabilities or
obligations that would be required to be reflected or reserved against in a
balance sheet prepared in accordance with Peruvian GAAP in a manner consistent
with the Financial Statements except for (a) liabilities or obligations
reflected or reserved against in the Financial Statements or (b) liabilities,
including liabilities incurred in the ordinary course of business since December
31, 2004 that, in any case or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect.

     Section 6.07 Financial Statements. (a)The financial statements of the
Issuer included in the Offering Circular (including any restatements thereof, if
applicable), as well as with respect to a specific Issue, the financial
statements of the Issuer included in the applicable Pricing Supplement (such
financial statements included in the applicable Pricing Supplement, the
"FINANCIAL STATEMENTS"), fairly present, in all material respects, the financial
condition of the Issuer and the results of operations and changes in financial
position as of the date of such statements, and have been prepared in accordance
with Peruvian GAAP consistently applied throughout the periods reported therein.
There are no material off-balance sheet transactions, arrangements, obligations
or relationships attributable to the Issuer's business or to which the Issuer is
a party.

     (b) Except as otherwise disclosed in writing to the Common Representative,
or as otherwise disclosed in the Offering Circular and the applicable Pricing
Supplement, since the date of such financial statements there has been no
material adverse change in the Issuer's financial condition.

     Section 6.08 Ranking. The obligations of the Issuer under this Indenture,
any Supplemental Indenture and the Bonds issued hereunder and thereunder, will
at all times rank in right of payment and of collateral security (a) pari passu
with the Issuer's obligations under the Senior Facility Loan Agreements and the
Senior Facility Loans made thereunder, (b) senior to the obligations of the
Issuer in respect of the Subordinated Loans and (c) pari passu in right of
payment with or senior in right of payment to, and senior in right of collateral
security (other than Permitted Liens) to, all other obligations of the Issuer
other than those which have priority under Applicable Law.

     Section 6.09 [Mining and Beneficiation Concessions. Except as set forth in
Schedule 6.09 or as would not, in any case or in the aggregate, reasonably be
expected to result in a Material Adverse Lender Effect, the Issuer has full and
sufficient rights to use the Core Mining Concessions, water rights and surface
lands necessary for the Business as currently conducted and with respect to the
Sulfide Project, as described in the Offering Circular. Except as would not, in
any case or in the aggregate, reasonably be expected to result in a Material
Adverse Lender Effect, or as disclosed in Schedule 6.09, the real


                                       44



property not owned by Issuer is currently served by all easements, rights of way
and utilities services that are necessary for the operation of the Business as
currently conducted thereon or contemplated to be conducted thereon.]

     Section 6.10 [Environmental Matters. Except as set forth in Schedule 6.10
or as disclosed in the Offering Circular, the Issuer is in compliance in all
material respects with all Applicable Environmental Laws.]

     Section 6.11 [Labor Matters. Except as set forth in Schedule 6.11 or as
disclosed in the Offering Circular, the Issuer is in material compliance with
all applicable laws and regulations relating to labor, industrial relations and
the employment of its employees.]

     Section 6.12 [Consents, etc. Except as set forth in Schedule 6.12 or as
disclosed in the Offering Circular, neither the execution or delivery by the
Issuer of this Indenture nor the consummation or performance by the Issuer of
the transactions provided for hereby or thereby is subject to any requirement
that the Issuer obtain any consent, approval or authorization of, or make any
declaration or filing with, any third party that is not a Governmental
Authority, except where the failure to obtain such consent, approval or
authorization or to make such declaration or filing would not reasonably be
expected to materially impair the operation of the Business.]

     Section 6.13 [No MPA Default. To the extent any Senior Facility Loan
Obligations remain outstanding on the date as of which this representation is
made, no event of default has been declared and is continuing under the Master
Participation Agreement.]

     Section 6.14 [Security Documents. The security interests granted in the
Collateral pursuant to the Security Documents which are on the date as of which
this representation is made are required to be registered pursuant to the terms
of the Master Security Agreement have been duly registered and such
registrations is in full force and effect.]

     Section 6.15 Ratification and Amendment of Representations and Warranties.
(a)With respect to each Issue, the Issuer shall be deemed to have ratified the
validity of the representations and warranties set forth in this Article VI to
the Common Representative, on behalf of the Bondholders of the applicable Issue
and the Structuring Entity in the following situations:

          (i) Upon execution of the applicable Supplemental Indenture (unless
     the Issuer expressly states otherwise therein);

          (ii) Upon execution of the public deeds incorporating this Indenture
     and the applicable Supplemental Indenture (unless the Issuer otherwise
     notifies the Common Representative and the Structuring Entity in writing
     prior to the execution of such public deeds); and

          (iii) On the Placement Date of each of the Bonds of such Issue (unless
     the Issuer otherwise notifies the Common Representative and the Structuring
     Entity in writing at least [two (2)] Business Days prior to the Placement
     Date).


                                       45



     (b) With respect to each Issue, (i) the representations and warranties set
forth in this Article VI may be amended, extended, and/or adjusted in the
applicable Supplemental Indenture, and (ii) if requested by the Issuer, a breach
of any of the representations and warranties set forth in this Article VI may be
waived upon approval of a Special Meeting of the applicable Issue.

                                   ARTICLE VII

                                   COLLATERAL

     Section 7.01 Collateral. All payment and other obligations of the Issuer
under the Bonds and the Senior Facility Loan Agreements are secured by the
Collateral.

     Section 7.02 Enforcement on the Collateral. The enforcement on the
Collateral by the Senior Lenders shall be governed by the provisions of the
Master Security Agreement, which governs the relationship between the Senior
Facility Lenders and the Bondholders, and the other Security Documents.

     Section 7.03 Release of Collateral. Pursuant to the terms of the Master
Security Agreement, upon the payment in full of the Senior Facility Loan
Obligations and upon receipt by the Common Representative of a written
certificate from the Administrative Agent to such effect, all security interests
and rights in the Collateral created in favor of the Senior Lenders pursuant to
the Master Security Agreement and the other Security Documents shall terminate
and be released; provided, however, that the Issuer and the Common
Representative shall have received from any two of the rating agencies that have
issued a rating with respect to the Bonds written confirmation that immediately
after the release of the Collateral, and as a result thereof, the rating of the
Bonds will be at least equal to the greater of (i) the rating of the Bonds
immediately before such release and (ii) the rating issued to the Bonds as of
their Issue Date, provided further, that in the event that one or both of such
rating agencies are unable to provide such written confirmation, the Issuer may
seek written confirmation from one or more, as the case may be, other rating
agencies registered with CONASEV. Thereafter, the Issuer shall not, without the
prior written consent of the Common Representative, create, assume or suffer to
exist any Lien upon any of its material Property, assets or contractual rights,
in each case whether then owned or thereafter acquired, except for Permitted
Liens.

                                  ARTICLE VIII

                       DEFAULTS AND EVENTS OF DEFAULT(22)

     Section 8.01 Defaults. Each of the following events shall constitute a
"DEFAULT" with respect to a specific Issue during the term of effectiveness of
the Bonds of such Issue:

- ----------
(22) Note: Provisions in brackets below will only be included if the relevant
     provision is required for marketing purpose or by applicable laws or
     regulations.


                                       46



     (a) The Issuer fails to make a payment in respect of interest or principal
on the Bonds or the Senior Facility Loans (each such default, a "PAYMENT
DEFAULT") when and as such payment shall be due and payable, as provided in this
Indenture, the applicable Supplemental Indenture or in the applicable Senior
Facility Lender Financing Documents, provided that a Payment Default shall not
occur if such default is the result of the actions of or the failure to act by
the Paying Agent or any other paying agent appointed by the Issuer as provided
in Section 3.11(a) of this Indenture.

     (b) The Issuer fails to (i) use the proceeds of the Bonds of such Issue for
the purposes set forth in this Indenture or the applicable Supplemental
Indenture, (ii) observe any of the material restrictions in Article V of this
Indenture, (iii) meet the material obligations contained in Article IV of this
Indenture, or (iv) meet any other material obligation, term or condition set
forth in this Indenture or the applicable Supplemental Indenture, in such a
manner that such Default could reasonably result in a Material Adverse Effect.

     (c) The Issuer commences a proceeding under any applicable bankruptcy,
reorganization, arrangement, readjustment of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law (whether now or hereafter in
effect) relating to itself, or is declared bankrupt, is dissolved by reason of
insolvency or makes a general assignment for the benefit of creditors, or any
action is taken by it for the purpose of effecting any of the foregoing or by a
receiver, custodian or trustee or other officer or representative of a court or
of creditors; or there is commenced against it any such proceeding which remains
undismissed for 60 days from the date the Issuer receives such notification from
the court where such proceeding has been filed.

     (d) A representation or warranty made by the Issuer hereunder shall prove
to have been false when made or ratified in any material respect and such breach
of representation or warranty could reasonably be expected to have a Material
Adverse Effect.

     (e) Any of this Indenture, the applicable Supplemental Indenture, the Bonds
issued thereunder, the applicable Pricing Supplement or any of the Senior
Lenders Financing Documents is declared null, voidable or invalid by final and
binding decision of the competent authority and, consequently, is legally void,
or if the Issuer challenges the validity thereof, except due to causes not
attributable to the Issuer.

     (f) The Issuer shall fail to obtain, maintain or renew any Core
Governmental Approval and (i) such failure is reasonably likely to have a
Material Adverse Effect and the Issuer fails to obtain a replacement Core
Governmental Approval within 90 days after the occurrence of such failure to
obtain, maintain or renew such Core Governmental Approval or (ii) in the case of
a Core Governmental Approval that is an Identified Material Project Document,
such failure is reasonably likely to have a Material Adverse Project Effect and
the Issuer fails to obtain a replacement Core Governmental Approval within 180
days after the occurrence of such failure to obtain, maintain or renew such Core
Governmental Approval.


                                       47



     (g) Any Indebtedness of the Issuer (other than the Senior Loans and
Subordinated Loans) that is due and payable (it being understood that
Indebtedness other than for borrowed money shall not be deemed to be due and
payable if there is a good faith dispute as to the amount of such Indebtedness)
in a principal amount in excess of U.S.$10,000,000 or its Equivalent is not paid
when due (and any grace period relating thereto has expired) or becomes or is
declared to be due and payable prior to the stated maturity thereof and such
Indebtedness shall remain unpaid for 30 days from its due date or from the date
of such acceleration.

     (h) Final judgment or judgments for the payment of money in excess of
U.S.$10,000,000 in the aggregate or its Equivalent shall be rendered by a court
or courts against the Issuer and shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 60 days from the date of
notification to the Issuer.

     (i) Any of the Shareholders or the Shareholders' Parents breaches its share
transfer restrictions set forth in Article II of the Transfer Restrictions
Agreement.

     (j) [To the extent that the Collateral has not been released as described
in Section 7.03, security interests purported to be created by or under any of
the Security Documents with respect to the Collateral shall fail or cease to be
validly perfected first priority security interests where such failure or
cessation is, by itself or in the aggregate, reasonably likely to have a
Material Adverse Effect.]

     (k) [Abandonment or Total Loss of the Sulfide Project or the Current
Operations shall have occurred.]

     Section 8.02 Occurrence of Defaults.

     (a) Notwithstanding the Issuer's obligations under the regulations on
material facts and confidential information (Reglamento de Hechos de Importancia
e Informacion Reservada", approved by CONASEV Resolution No. 107-2002-EF/94.10),
upon the occurrence of one or more of the Defaults described in Section 8.01
(other than the Defaults described in subsections (a), (c) and (k) of Section
8.01) with respect to a specific Issue, the Issuer shall report such event in
writing to the Common Representative within three (3) Business Days after the
Issuer is notified or first becomes aware of such Default. Upon the receipt of
such notification, the Common Representative shall verify the occurrence such
Default as contemplated under Section 9.08 of this Indenture, and upon such
verification, convene a General Meeting pursuant to Article X of this Indenture.
In such General Meeting, the Bondholders shall instruct the Common
Representative whether or not to deliver a notice to the Issuer, with a copy to
the Administrative Agent, declaring that a Default has occurred (the "NOTICE OF
ORDINARY DEFAULT"). The Issuer shall have a period of thirty (30) Business Days
from the next Business Day following the day on which the Issuer receives the
Notice of Ordinary Default with respect to the applicable Default in order to
cure such Default (the "ORDINARY DEFAULT CURE PERIOD"), provided that with
respect to those Defaults described in subsections (b) of Section 8.01, the
Ordinary Default Cure Period shall be (i) zero (0) days with respect to the
obligations set forth under Sections 5.01(a) and 5.01(d), (ii) thirty (30) days
with respect to the obligations set forth under Sections 4.01(j)(ii), [4.01(o),
4.01(r)], 5.01(b), 5.01(e), and 5.01(f), and (iii) ninety (90) days with respect
to the obligations set forth under


                                       48



Sections 4.01(e), 4.01(g), 4.01(h), 4.01(j)(i), 4.01(k), [4.01(m), 4.01(n), and
4.01(q)], in each case, from the date the Issuer receives the Notice of Ordinary
Default with respect to a applicable Default, except for in case of Default with
respect to the Issuer's obligation under Section 4.01(o), but only relates to
covenants to keep the Core Mining Concessions in full force and effective, 30
days from the date of occurrence of the breach of such covenant. In the event
that the Issuer fails to cure the applicable Default during the applicable
Ordinary Default Cure Period, an Ordinary Event of Default with respect to the
applicable Issue shall be deemed to have occurred (each, an "ORDINARY EVENT OF
DEFAULT").

     (b) Upon the occurrence of a Payment Default described in (a) of Section
8.01 with respect to a specific Issue and the failure on the part of the Issuer
to cure such Payment Default by the next Business Day following the date on
which the applicable payment was originally due (the "PAYMENT DEFAULT CURE
PERIOD"), a Payment Event of Default shall be deemed to have occurred with
respect to the applicable Issue (each, a "PAYMENT EVENT OF DEFAULT").

     (c) Upon the occurrence of a Default described in subsection (c) of Section
8.01 (each, a "BANKRUPTCY EVENT OF DEFAULT"), a Bankruptcy Event of Default with
respect to all Issues shall be deemed to have occurred.

     (d) [Upon the occurrence of a Default described in subsection (k) of
Section 8.01 (an "ABANDONMENT EVENT OF DEFAULT"), an Abandonment Event of
Default with respect to all Issues shall be deemed to have occurred.]

     Section 8.03 Events of Default and Remedies Prior to Payment in Full of
Senior Facility Loan Obligations. Prior to the payment in full of the Senior
Facility Loan Obligations, the Bondholders shall have the following remedies
upon the occurrence of an Ordinary Event of Default, Payment Event of Default,
Bankruptcy Event of Default or Abandonment Event of Default, as the case may be:

     (a) Ordinary Event of Default. Upon the occurrence of an Ordinary Event of
Default with respect to a particular Issue,

          (i) The Issuer shall report such Ordinary Event of Default to CONASEV
     and to the entity entrusted with conducting the centralized negotiation
     mechanism where the Bonds are registered through a "Material Fact"
     communication, as well as to the Common Representative of the affected
     Issue, without prejudice to the obligation set forth in Section 4.01(c) of
     this Indenture.

          (ii) (A) Within ten (10) Business Days following the occurrence of an
     Ordinary Event of Default, the Common Representative shall schedule a
     Special Meeting of the Bondholders of the applicable Issue in accordance
     with the requirement of Article X (except as otherwise provided in this
     Section 8.03(a)).


                                       49



               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such Special Meeting has been
          scheduled.

          (iii) (A) At the Special Meeting scheduled pursuant to Section
     8.03(a)(ii) above, the Bondholders of the applicable Issue shall resolve
     whether or not to instruct the Common Representative to (1) extend the
     Ordinary Default Cure Period; (2) to the extent that there are multiple
     Issues under the Program, schedule a General Meeting at which Bondholders
     of all Issues shall resolve as to whether or not to direct the Common
     Representative to deliver a notice of such Ordinary Event of Default (the
     "NOTICE OF ORDINARY EVENT OF DEFAULT") to the Issuer and to commence or not
     to commence the voting process relating to the potential exercise of
     remedies pursuant to Article V of the Master Security Agreement (including
     by exercising its right to request the Administrative Agent to convene a
     meeting of the Senior Lenders) or (3) to the extent that there is only one
     (1) Issue under the Program, whether or not to deliver a Notice of Ordinary
     Event of Default to the Issuer and to commence or not to commence the
     voting process relating to the potential exercise of remedies pursuant to
     Article V of the Master Security Agreement; provided that so long as the
     Senior Facility Loans remain outstanding, the Special Meeting described
     hereunder shall be prohibited from taking, or from directing the Common
     Representative to take, any other actions with respect to the exercise of
     remedies upon the occurrence of an Ordinary Event of Default.

               (B) The Common Representative shall notify the Issuer, in
          writing, no later than the next Business Day following the day on
          which the Special Meeting is held with respect to the general terms of
          the resolutions adopted at such Special Meeting.

          (iv) In the event that the Special Meeting described in this Section
     8.03(a) resolves to direct the Common Representative to schedule a General
     Meeting at which the Bondholders of all Issues shall resolve as to whether
     or not to direct the Common Representative to deliver to the Issuer a
     Notice of Ordinary Event of Default, the Common Representative shall
     schedule a General Meeting pursuant to the procedures set forth in Section
     10.03 of this Indenture.

          (v) (A) At the General Meeting described in Section 8.03(a)(iv), the
     Bondholders shall resolve whether or not to instruct the Common
     Representative to deliver a Notice of Ordinary Event of Default to the
     Issuer and to commence or not to commence the voting process relating to
     the potential exercise of remedies pursuant to Article V of the Master
     Security Agreement (including by exercising its right to request the
     Administrative Agent to convene a meeting of the Senior Lenders); provided
     that so long as the Senior Facility Loans remain outstanding, the General
     Meeting described hereunder shall be prohibited from taking, or from
     directing the Common Representative to take, any other actions with respect
     to the exercise of remedies upon the occurrence of an Ordinary Event of
     Default.


                                       50



               (B) In the event that such General Meeting resolves to direct the
          Common Representative to deliver to the Issuer a Notice of Ordinary
          Event of Default, the Common Representative shall (i) notify the
          Issuer, in writing, no later than the next Business Day following the
          day on which such General Meeting is held with respect to the general
          terms of the resolutions adopted at such General Meeting and (ii)
          deliver such Notice of Ordinary Event of Default to the Issuer, with a
          copy to the Administrative Agent, within [three (3)] Business Days of
          the day on which such General Meeting is held.

          (vi) (A) For the avoidance of doubt, the remedies set forth in this
     Section 8.03(a) shall be the exclusive and sole remedies of the Bondholders
     upon the occurrence of an Ordinary Event of Default so long as the Senior
     Facility Loans remain outstanding.

               (B) Following the payment in full of the Senior Facility Loan
          Obligations, upon the occurrence of an Ordinary Event of Default, the
          Bondholders shall have the remedies set forth in Section 8.04(a) of
          this Indenture.

     (b) Payment Event of Default. Upon the occurrence of a Payment Event of
Default with respect to a particular Issue,

          (i) (A) Within two (2) Business Days following the occurrence of a
     Payment Event of Default, the Common Representative shall schedule a
     Special Meeting of the Bondholders of the applicable Issue in accordance
     with the requirements of Article X (except as otherwise set forth in this
     Section 8.03(b)).

               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such Special Meeting has been
          scheduled.

          (ii) (A) At the Special Meeting scheduled pursuant to Section
     8.03(b)(i) above, the Bondholders of the applicable Issue shall resolve
     whether or not to instruct the Common Representative (1) to extend the
     Payment Default Cure Period; (2) to the extent that there are multiple
     Issues under the Program, to schedule a General Meeting at which
     Bondholders of all Issues shall vote as to whether or not to direct the
     Common Representative to deliver a notice of such Payment Event of Default
     (the "NOTICE OF PAYMENT EVENT OF DEFAULT") to the Issuer and to commence or
     not to commence the voting process relating to the potential exercise of
     remedies pursuant to Article V of the Master Security Agreement (including
     by exercising its right to request the Administrative Agent to convene a
     meeting of the Senior Lenders); or (3) to the extent that there is only one
     (1) Issue under the Program, whether or not to deliver a Notice of Payment
     Event of Default to the Issuer and to commence or not to commence the
     voting process relating to the potential exercise of remedies pursuant to
     Article V of the Master Security Agreement; provided that so long as the
     Senior Facility Loans remain


                                       51



     outstanding, the Special Meeting described hereunder shall be prohibited
     from taking, or from directing the Common Representative to take, any other
     actions with respect to the exercise of remedies upon the occurrence of a
     Payment Event of Default.

               (B) The Common Representative shall notify the Issuer, in
          writing, no later than the next Business Day following the day on
          which the Special Meeting is held with respect to the general terms of
          the resolutions adopted at such Special Meeting and, if applicable,
          the extent to which the Special Meeting was unable to adopt any
          resolutions relating to the Payment Event of Default.

          (iii) (A) Each Bondholder of the applicable Issue shall not exercise
     its statutory right to collect unpaid interest and principal on the Bonds
     until a resolution has been adopted by the Bondholders of the applicable
     Issue at the Special Meeting with respect to what measures shall be taken
     among those described in Section 8.03(b)(ii)(A) above. Moreover, as
     provided in Section 326 of the General Corporate Law, the Bondholders of
     the applicable Issue may not commence individual collection actions which
     are inconsistent with a resolution adopted by the Bondholders of such Issue
     at the Special Meeting described herein.

               (B) Notwithstanding the provisions of this Section 8.03(b), each
          Bondholder of the applicable Issue may exercise its statutory right to
          collect unpaid interest and principal on the Bonds, as well as any
          other right described in Section 326 of the General Corporate Law, (1)
          in the event that no resolution is reached as to the exercise of
          remedies at the Special Meeting described in Section 8.03(b)(ii), from
          the next Business Day following the date of such Special Meeting or
          the second call of such Special Meeting, as the case may be, or (2) in
          the event that the Special Meeting described in Section 8.03(b)(ii)(A)
          is not held on the first or second call, from the next Business Day
          following the date on which such Special Meeting was scheduled to be
          held on the second call as provided in Article X.

               (C) To the extent the Common Representative is notified by a
          Bondholder pursuant to Section 9.06, the Common Representative shall
          notify the Issuer, in writing, of the exercise of statutory remedies
          by individual Bondholders, if any, no later than the next Business Day
          following the date on which the Common Representative receives notice
          of the exercise of such statutory remedies.

          (iv) In the event that the Special Meeting described in this Section
     8.03(b) resolves to direct the Common Representative to schedule a General
     Meeting at which the Bondholders of all Issue shall resolve as to whether
     or not to direct the Common Representative to deliver to the Issuer a
     Notice of Payment Event of Default, the Common Representative shall
     schedule a General Meeting pursuant to the procedures set forth in Section
     10.03 of this Indenture.


                                       52



          (v) (A) At the General Meeting described in Section 8.03(b)(iv), the
     Bondholders shall resolve whether or not to instruct the Common
     Representative to deliver a Notice of Payment Event of Default to the
     Issuer and to commence or not to commence the voting process relating to
     the potential exercise of remedies pursuant to Article V of the Master
     Security Agreement (including by exercising its right to request the
     Administrative Agent to convene a meeting of the Senior Lenders), provided
     that so long as the Senior Facility Loans remain outstanding, the General
     Meeting described hereunder shall be prohibited from taking, or from
     directing the Common Representative to take, any other actions with respect
     to the exercise of remedies upon the occurrence of a Payment Event of
     Default.

               (B) In the event that such General Meeting resolves to direct the
          Common Representative to deliver to the Issuer a Notice of Payment
          Event of Default, the Common Representative shall (1) notify the
          Issuer, in writing, no later than the next Business Day following the
          day on which such General Meeting is held with respect to the general
          terms of the resolutions adopted at such General Meeting and (2)
          deliver such Notice of Payment Event of Default to the Issuer, with a
          copy to the Administrative Agent, within [three (3)] Business Days of
          the day on which such General Meeting is held.

          (vi) (A) For the avoidance of doubt, the remedies set forth in this
     Section 8.03(b) and those granted to the Bondholders by Applicable Law
     shall, subject to the terms and conditions set forth in this Section
     8.03(b), be the exclusive and sole remedies of the Bondholders upon the
     occurrence of a Payment Event of Default so long as the Senior Facility
     Loans remain outstanding.

               (B) Following the payment in full of the Senior Facility Loan
          Obligations, upon the occurrence of a Payment Event of Default, the
          Bondholders shall have the remedies set forth in Section 8.04(b) of
          this Indenture.

          (vii) For the avoidance of doubt, any and all actions taken in
     connection with the foreclosure upon the Collateral which secures all
     payment and other obligations of the Issuer under the Bonds and the Senior
     Facility Loan Agreements must be taken pursuant to the terms and conditions
     of the Master Security Agreement. Accordingly, Article 328 of the General
     Corporate Law should not be interpreted as providing an alternative way for
     individual Bondholders to foreclose upon the Collateral in a manner that is
     inconsistent with the specific terms and conditions provided for in the
     Master Security Agreement. Furthermore, no Bondholder can accelerate the
     payment obligations of principal or interest on the Bonds unless as
     expressly set forth under Article V of the Master Security Agreement or
     Section 8.03(e) of this Indenture. Accordingly, the parties expressly agree
     that the acceleration right contemplated under Article 1323 of the Peruvian
     Civil Code shall not be applicable to the payment obligations of the Issuer
     under the Bonds.


                                       53



     (c) Bankruptcy Event of Default. Upon the occurrence of a Bankruptcy Event
of Default,

          (i) All of the Bonds shall automatically become immediately due and
     payable, both as to principal and interest, without further notice and
     without presentment, demand, protest or other notice of any kind, all of
     which are hereby expressly waived by the Issuer.

          (ii) The Issuer shall report such Bankruptcy Event of Default to
     CONASEV and to the entity entrusted with conducting the centralized
     negotiation mechanism where the Bonds are registered through a "Material
     Fact" communication, as well as to the Common Representative, without
     prejudice to the obligation set forth in Section 4.01(c) herein.

          (iii) (A) No later than two (2) Business Days following the occurrence
     of a Bankruptcy Event of Default, the Common Representative shall schedule
     a General Meeting of the Bondholders of all Issues in accordance with the
     requirements of Article X (except as otherwise set forth in this Section
     8.03(c)).

               (B) (1)The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such General Meeting has been
          scheduled.

          (iv) (A) At the General Meeting scheduled pursuant to Section
     8.03(c)(iii) above, the Bondholders of all Issues shall resolve whether or
     not to direct the Common Representative to deliver a Notice of such
     Bankruptcy Event of Default (the "NOTICE OF BANKRUPTCY EVENT OF DEFAULT")
     to the Issuer and to commence or not to commence the voting process
     relating to the potential exercise of remedies pursuant to Article V of the
     Master Security Agreement (including by exercising its right to request the
     Administrative Agent to convene a meeting of the Senior Lenders); provided
     that so long as the Senior Facility Loans remain outstanding, the General
     Meeting described hereunder shall be prohibited from taking, or from
     directing the Common Representative to take, any other actions with respect
     to the exercise of remedies upon the occurrence of a Bankruptcy Event of
     Default.

               (B) In the event that such General Meeting resolves to direct the
          Common Representative to deliver to the Issuer a Notice of Bankruptcy
          Event of Default, the Common Representative shall (1) notify the
          Issuer, in writing, no later than the next Business Day following the
          day on which such General Meeting is held with respect to the general
          terms of the resolutions adopted at such General Meeting and (2)
          deliver such Notice of Bankruptcy Event of Default to the Issuer, with
          a copy to the Administrative Agent, within [three (3)] Business Days
          of the day on which such General Meeting is held.

          (v) For the avoidance of doubt, the remedies set forth in this Section
     8.03(c) shall be the exclusive and sole remedies of the Bondholders upon
     the


                                       54



     occurrence of a Bankruptcy Event of Default so long as the Senior Facility
     Loans remain outstanding.

          (vi) Following the payment in full of the Senior Facility Loan
     Obligations upon the occurrence of a Bankruptcy Event of Default, the
     Bondholders shall have the remedies set forth in Section 8.04(c) of this
     Indenture.

     (d) [Abandonment Event of Default. Upon the occurrence of an Abandonment
Event of Default,

          (i) The Issuer shall report such Abandonment Event of Default to
     CONASEV and to the entity entrusted with conducting the centralized
     negotiation mechanism where the Bonds are registered through a "Material
     Fact" communication, as well as to the Common Representative, without
     prejudice to the obligation set forth in Section 4.01(c) herein.

          (ii) (A) Within two (2) Business Days following the occurrence of an
     Abandonment Event of Default, the Common Representative shall schedule a
     General Meeting of the Bondholders of all Issues in accordance with the
     requirements of Section 10.03 (except as otherwise set forth in this
     Section 8.03(d)).

               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such General Meeting has been
          scheduled.

          (iii) (A) At the General Meeting scheduled pursuant to Section
     8.03(d)(ii) above, the Bondholders of all Issues shall resolve whether or
     not to direct the Common Representative to deliver a Notice of such
     Abandonment Event of Default (the "NOTICE OF ABANDONMENT EVENT OF DEFAULT")
     to the Issuer and to commence or not to commence the voting process
     relating to the potential exercise of remedies pursuant to Article V of the
     Master Security Agreement (including by exercising its right to request the
     Administrative Agent to convene a meeting of the Senior Lenders); provided
     that so long as the Senior Facility Loans remain outstanding, the General
     Meeting described hereunder shall be prohibited from taking, or from
     directing the Common Representative to take, any other actions with respect
     to the exercise of remedies upon the occurrence of an Abandonment Event of
     Default.

               (B) In the event that such General Meeting resolves to direct the
          Common Representative to deliver to the Issuer a Notice of Abandonment
          Event of Default, the Common Representative shall (1) notify the
          Issuer, in writing, no later than the next Business Day following the
          day on which such General Meeting is held with respect to the general
          terms of the resolutions adopted at such General Meeting and (2)
          deliver such Notice of Abandonment Event of Default to the Issuer,
          with a copy to the Administrative Agent, within [three (3)] Business
          Days of the day on which such General Meeting is held.


                                       55



          (iv) For the avoidance of doubt, the remedies set forth in this
     Section 8.03(d) shall be the exclusive and sole remedies of the Bondholders
     upon the occurrence of an Abandonment Event of Default so long as the
     Senior Facility Loans remain outstanding.

          (v) Following the payment in full of the Senior Facility Loan
     Obligations upon the occurrence of an Abandonment Event of Default, the
     Bondholders shall have the remedies set forth in Section 8.04(d) of this
     Indenture.]

     (e) Cross-Acceleration. In the event that all of the Senior Facility Loan
Obligations become immediately due and payable pursuant to the terms of the
Master Security Agreement, all of the Bonds shall automatically become
immediately due and payable, without further notice and without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Issuer.

     (f) Rescission of Acceleration. Following an acceleration of the Bonds of
any Issue in accordance with the terms hereof and of the Master Security
Agreement, such acceleration shall be rescinded and annulled in circumstances
where the Senior Lenders have made decision to rescind and annul such
acceleration in accordance with Section 5.01(c) of the Master Security
Agreement.

     Section 8.04 Remedies Following Payment in Full of Senior Facility Loan
Obligations. Upon the payment in full of the Senior Facility Loan Obligations,
the Bondholders shall have the following remedies upon the occurrence of an
Ordinary Event of Default, Payment Event of Default Bankruptcy Event of Default,
or Abandonment Event of Default, as the case may be:

     (a) Ordinary Event of Default. Upon the occurrence of an Ordinary Event of
Default with respect to a particular Issue,

          (i) The Issuer shall report such Ordinary Event of Default to CONASEV
     and to the entity entrusted with conducting the centralized negotiation
     mechanism where the Bonds are registered through a "Material Fact"
     communication, as well as to the Common Representative of the affected
     Issue, without prejudice to the obligation set forth in Section 4.01(c) of
     this Indenture.

          (ii) (A) Within ten (10) Business Days following an Ordinary Event of
     Default, the Common Representative shall schedule a Special Meeting of the
     Bondholders of the applicable Issue in accordance with the requirements of
     Article X.

               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such Special Meeting has been
          scheduled.

          (iii) (A) At the Special Meeting scheduled pursuant to Section
     8.04(a)(ii) above, the Bondholders of the applicable Issue shall resolve
     whether or not to instruct the Common Representative to (1) extend the
     Ordinary Default Cure


                                       56



     Period; (2) declare the Bonds of the applicable Issue to be due and
     payable, both as to principal and as to interest and upon such declaration,
     all principal and interest of the Bonds of the applicable Issue shall
     automatically become immediately due and payable without any further notice
     and without presentment, demand, protest or other notice of any kind, all
     of which are expressly waived by the Issuer; (3) waive any remedies of the
     Bondholders of the applicable Issue with respect to such Ordinary Event of
     Default; or (4) take any other actions that such Special Meeting may deem
     appropriate with respect to such Ordinary Event of Default.

               (B) The Common Representative shall notify the Issuer, in
          writing, no later than the next Business Day following the day on
          which the Special Meeting is held with respect to the general terms of
          the resolutions adopted at such Special Meeting.

     (b) Payment Event of Default. Upon the occurrence of a Payment Event of
Default with respect to a particular Issue,

          (i) (A) Following the expiration of the Payment Default Cure Period
     and within two (2) Business Days following such expiration of the Payment
     Default Cure Period, the Common Representative shall schedule a Special
     Meeting of the Bondholders of the applicable Issue in accordance with the
     requirements of Article X.

               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such Special Meeting has been
          scheduled.

          (ii) (A) At the Special Meeting scheduled pursuant to Section
     8.04(b)(i) above, the Bondholders of the applicable Issue shall resolve
     whether or not to instruct the Common Representative to (1) extend the
     Payment Default Cure Period; (2) declare the Bonds of the applicable Issue
     to be due and payable, both as to principal and as to interest and upon
     such declaration, all principal and interest of the Bonds of the applicable
     Issue shall automatically become immediately due and payable without any
     further notice and without presentment, demand, protest or other notice of
     any kind, all of which are hereby expressly waived by the Issuer; (3) waive
     any remedies of the Bondholders of the applicable Issue with respect to
     such Payment Event of Default; or (4) take any other actions that such
     Special Meeting may deem appropriate with respect to such Payment Event of
     Default.

               (B) The Common Representative shall notify the Issuer, in
          writing, no later than the next Business Day following the day on
          which the Special Meeting is held with respect to the general terms of
          the resolutions adopted at such Special Meeting and, if applicable,
          the extent to which the Special Meeting was unable to adopt any
          resolutions relating to the Payment Event of Default.

          (iii) (A) Each Bondholder of the applicable Issue shall not exercise
     its statutory right to collect unpaid interest and principal on the Bonds
     until a resolution


                                       57



     has been adopted by the Bondholders of the applicable Issue at the Special
     Meeting with respect to what measures shall be taken among those described
     in Section 8.04(b)(ii)(A) above. Moreover, as provided in Section 326 of
     the General Corporate Law, the Bondholders of the applicable Issue may not
     commence individual collection actions which are inconsistent with a
     resolution adopted by the Bondholders of such Issue at the Special Meeting
     described herein.

               (B) Notwithstanding the provisions of this Section 8.04(b), each
          Bondholder of the applicable Issue may exercise its statutory right to
          collect unpaid interest and principal on the Bonds, as well as any
          other right described in Section 326 of the General Corporate Law, (1)
          in the event that no resolution is reached as to the exercise of
          remedies at the Special Meeting described in Section 8.04(b)(ii), from
          the next Business Day following the date of such Special Meeting or
          the second call of such Special Meeting, as the case may be or (2) in
          the event that the Special Meeting described in Section 8.04(b)(ii)(A)
          is not held on the first or second call, from the next Business Day
          following the date on which such Special Meeting was scheduled to be
          held on the second call as provided in Article X.

               (C) To the extent that the Common Representative is notified by a
          Bondholder pursuant to Section 9.06, the Common Representative shall
          notify the Issuer, in writing, of the exercise of statutory remedies
          by individual Bondholders, if any, no later than the next Business Day
          following the date on which the Common Representative receives notice
          of the exercise of such statutory remedies.

     (c) Bankruptcy Event of Default. Upon the occurrence of a Bankruptcy Event
of Default,

          (i) All of the Bonds shall automatically become immediately due and
     payable, both as to principal and as to interest, without further notice
     and without presentment, demand, protest or other notice of any kind, all
     of which are hereby expressly waived by the Issuer.

          (ii) The Issuer shall report such Bankruptcy Event of Default to
     CONASEV and to the entity entrusted with conducting the centralized
     negotiation mechanism where the Bonds are registered through a "Material
     Fact" communication, as well as to the Common Representative, without
     prejudice to the obligation set forth in Section 4.01(c) herein.

          (iii) (A) Within two (2) Business Days following the occurrence of a
     Bankruptcy Event of Default, the Common Representative shall schedule a
     General Meeting of the Bondholders of all Issues in accordance with the
     requirements of Article X.

               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such General Meeting has been
          scheduled.


                                       58



          (iv) (A) At the General Meeting scheduled pursuant to Section
     8.04(c)(iii) above, the Bondholders of all Issues shall resolve whether or
     not to instruct the Common Representative to take any other actions that
     such General Meeting may deem appropriate with respect to such Bankruptcy
     Event of Default.

               (B) The Common Representative shall notify the Issuer, in
          writing, no later than the next Business Day following the day on
          which the General Meeting is held with respect to the general terms of
          the resolutions adopted at such General Meeting.

     (d) [Abandonment Event of Default. Upon the occurrence of an Abandonment
Event of Default,

          (i) The Issuer shall report such Abandonment Event of Default to
     CONASEV and to the entity entrusted with conducting the centralized
     negotiation mechanism where the Bonds are registered through a "Material
     Fact" communication, as well as to the Common Representative, without
     prejudice to the obligation set forth in Section 4.01(c) herein.

          (ii) (A) Within two (2) Business Days following the occurrence of an
     Abandonment Event of Default, the Common Representative shall schedule a
     General Meeting of the Bondholders of all Issues in accordance with the
     requirements of Article X.

               (B) The Common Representative shall notify the Issuer, in
          writing, on the same Business Day that such General Meeting has been
          scheduled.

          (iii) (A) At the General Meeting scheduled pursuant to Section
     8.04(d)(ii) above, the Bondholders of all Issues shall resolve whether or
     not to instruct the Common Representative to take any other actions that
     such General Meeting may deem appropriate with respect to such Abandonment
     Event of Default.

               (B) The Common Representative shall notify the Issuer, in
          writing, no later than the next Business Day following the day on
          which the General Meeting is held with respect to the general terms of
          the resolutions adopted at such General Meeting.]

     Section 8.05 [Abandonment. If the Issuer voluntarily ceases all or
substantially all construction or production activities of the Sulfide Project
or the Current Operations and such cessation continues without interruption for
90 days (the "ABANDONMENT TRIGGERING EVENT"), the Common Representative shall
have the right, pursuant to a resolution of a Special Meeting or, if there are
multiple Issues, of General Meeting, to deliver to the Issuer a notice (an
"ABANDONMENT INQUIRY") requesting a certificate (a "RESUMPTION CERTIFICATE")
from the Issuer certifying that the Issuer intends to cause all or substantially
all construction or production activities of the Sulfide Project or the Current
Operations, as the case may be, to resume as soon as is commercially
practicable. If, following the Issuer's receipt of an Abandonment Inquiry, (i)
within 30 days following delivery of the


                                       59



Abandonment Inquiry to the Issuer, the Issuer does not deliver a Resumption
Certificate or the Issuer does not resume all or substantially all such
activities, (ii) the Issuer timely delivers a Resumption Certificate but does
not resume all or substantially all such activities within 30 days following
such delivery, or (iii) the Issuer timely delivers a Resumption Certificate and
resumes such activities but does not maintain such activities for at least 120
days during the 180-day period following timely delivery of such a certificate,
an Abandonment shall be deemed to have occurred (an "ABANDONMENT"). For purposes
of this provision, the Issuer shall not be deemed to have voluntarily ceased
construction or production activities of the Sulfide Project or the Current
Operations if the cessation of construction or production activities is caused
by an Event of Political Force Majeure or results from the depletion of the ore
resources for the Current Operations, which is expected to occur prior to the
Maturity Date.]

                                   ARTICLE IX

                              COMMON REPRESENTATIVE

     Section 9.01 Duties. The Common Representative shall have no powers, rights
or duties other than those specifically set forth or provided for in this
Indenture, any Supplemental Indenture, Applicable Law, and, upon effectiveness
of the New Party Accession Agreement, the Completion Guarantee and the Master
Security Agreement.

     Section 9.02 Liability. (a) The Common Representative shall not be liable
for any error of judgment or for any act done or omitted to be done by it in
good faith or for any mistake of fact or law, or for anything which it may do or
refrain from doing, except for its own gross negligence or willful misconduct.
Further, the Common Representative shall not be liable for any act, failure to
act or Default of the Issuer or for any actions that individual Bondholders may
elect to take against the Issuer.

     (b) The Common Representative shall not be liable to the Bondholders of a
specific Issue for (i) any information provided by the Issuer in the Offering
Circular, this Indenture, any of the Supplemental Indentures and Pricing
Supplements and any other document prepared or furnished by the Issuer in order
to register the Program or any Bonds in the Public Register of the Securities
Market of CONASEV, (ii) any information provided by the Issuer to CONASEV, and
any General Meeting and/or Special Meeting during the term of effectiveness of
the Bonds of a specific Issue, or (iii) not disclosing any non-public
information (informacion privilegiada) relating to the Issuer in compliance with
article 43 of the Securities Market Law and other Applicable Law.

     (c) To the extent the Common Representative comes across any non public
information (informacion privilegiada) relating to the Issuer, it shall request
the Issuer to disclose such information to the market as required by Applicable
Law.

     Section 9.03 Powers, Rights and Duties of Common Representative With
Respect to Each Issue. The Common Representative shall have the following
individual powers, rights and duties with respect to the each Issue, unless
otherwise provided in this Indenture and/or the applicable Supplemental
Indenture:


                                       60



     (a) Schedule a Special Meeting (i) as soon as fifty percent (50%) of the
Issue is subscribed, (ii) as required by the terms of this Indenture and/or the
applicable Supplemental Indenture, (iii) as requested, through a letter recorded
by a Notary Public, by one or more Bondholders representing no less than twenty
percent (20%) of the aggregate face value of the then-outstanding Bonds of such
Issue; (iv) as requested by the Issuer pursuant to Section 10.03 of this
Indenture, (v) as required by the Administrative Agent, and (vi) whenever it
deems it necessary.

     (b) Chair any Special Meetings scheduled pursuant to Section 9.03(a) above.

     (c) Keep the minutes book of any Special Meeting scheduled pursuant to
Section 9.03(a) above, and be responsible for its custody and conservation.

     (d) Exercise all of the powers and perform all of the duties contemplated
under this Indenture and/or the applicable Supplemental Indenture.

     (e) Retain legal representation for the Bondholders of the specific Issue
as a group.

     (f) Attend the deliberations at any general shareholders meeting of the
Issuer, without the right to vote, in accordance with item 3 of Section 325 of
the General Corporate Law.

     (g) Confirm the payment by the Issuer of interest and principal with
respect to the Bonds and, in general, safeguard the rights of the Bondholders
within the limits set forth in this Indenture and/or the applicable Supplemental
Indenture. The aforementioned limits shall not preclude the applicability of the
provisions in Section 92 of the Securities Market Law.

     (h) Request from the Issuer all information and documentation required to
be provided by this Indenture and Applicable Law, and make such information and
documentation available to each Bondholder, upon prior written request, at the
address indicated in Section 13.02(b) of this Indenture.

     (i) Appoint the individual or individuals who will permanently represent
the Common Representative in connection with its dealings with the Issuer.

     (j) Call a general shareholders meeting of the Issuer in the event that (i)
there is a Payment Default for more than eight (8) Business Days and (ii) the
Issuer has failed to call such a meeting within such period.

     (k) (i) Institute and pursue legal proceedings on behalf of the Bondholders
and (ii) take other actions on behalf of the Bondholders to preserve rights or
property granted to it pursuant to this Indenture and/or the applicable
Supplemental Indenture, each as directed by the applicable Special Meeting and
at the sole cost and expense of the Bondholders attending such Special Meeting,
without prejudice to the provisions of Section 327 of the General Corporate Law;
provided that the Common Representative shall retain such legal counsel in
connection with the legal proceedings described above as directed by the
applicable Special Meeting; provided further that the Common Representative
shall not be


                                       61



liable to the Bondholders for the performance of such legal counsel during such
legal proceedings, for the outcome of such legal proceedings, or for any
expenses arising therefrom.

     (l) Within twenty-five (25) Business Days of payment in full of principal
and interest on the Bonds of such Issue, execute, jointly with the Issuer, the
applicable public instrument of repayment.

     (m) Maintain the confidentiality of all non-public information relating to
the Issuer and/or its shareholders as may become known to it in it capacity as
Common Representative, unless disclosure of such non-public information is
absolutely necessary for the Common Representative to meet its obligations under
this Indenture and/or the applicable Supplemental Indenture. For purposes of
this Section 9.03(m), the Common Representative shall request the Issuer to
disclose any such non-public information and the Issuer shall make such
disclosure in accordance with Applicable Law.

     (n) Deliver a notice that an Event of Default has ceased to exist to the
Issuer and the Administrative Agent in accordance with a resolution issued
pursuant to Section 10.02(a).

     (o) Any other obligations now or hereafter provided by Applicable Law,
including, without limitation, those set forth in Section 92 of the Securities
Market Law.

     Section 9.04 Powers, Rights and Duties of Common Representative With
Respect to All Issues. The Common Representative shall have the following
individual powers, rights and duties with respect to the all Issues as a whole,
without prejudice to its individual powers, rights and duties as Common
Representative with respect to each specific Issue:

     (a) Schedule a General Meeting (i) as required pursuant to the terms of
this Indenture; (ii) as requested, through a letter recorded by a Notary Public,
by one or more Bondholders representing no less than twenty percent (20%) of the
aggregate face value of the then-outstanding Bonds; (iii) as requested by the
Issuer pursuant to Section 10.03 of this Indenture; and (iv) as required by the
Administrative Agent.

     (b) Chair any General Meeting scheduled pursuant to Section 9.04(a) above.

     (c) Upon the execution of the first Supplemental Indenture pursuant to this
Indenture, execute and deliver the New Party Accession Agreement.

     (d) (i) Upon resolution of a General Meeting or Special Meeting, as the
case may be, scheduled pursuant to Section 8.03, deliver to the Issuer and the
Administrative Agent the applicable Notice of Indenture Event of Default.

          (ii) Upon resolution of a General Meeting contemplated under Section
     8.02(a), deliver to the Issuer a Notice of Ordinary Default.

          (iii) Upon resolution of a General Meeting or Special Meeting, as the
     case may be, request the Administrative Agent to convene a meeting of the
     Senior Lenders as contemplated under Section 6.10 of the Master Security
     Agreement.


                                       62



          (iv) Provide the Bondholders, as required by the Administrative Agent,
     with any material information relating to any voting or other decisions to
     be made by the Senior Lenders with respect to the exercise of remedies
     pursuant to Article V of the Master Security Agreement or the Completion
     Guarantee.

          (v) To the extent instructed by further resolution of such General
     Meeting, participate in any voting or other decisions to be made by the
     Senior Lenders with respect to the exercise of remedies pursuant to Article
     V of the Master Security Agreement or the Completion Guarantee.

     (e) Deliver a notice that an Event of Default has ceased to exist to the
Issuer and the Administrative Agent in accordance with a resolution issued
pursuant to Section 10.01(a).

     (f) Upon resolution of a General Meeting or Special Meeting, as the case
may be, scheduled pursuant to Article X of this Agreement, provide any consent
or approval with respect to any amendment or supplement to, or waiver of
provisions of, any Financing Documents that requires the consent or approval of
the Bondholders.

     (g) Keep the Minutes Book of any General Meeting scheduled pursuant to
Section 9.04(a) above and be responsible for its custody and conservation.

     (h) Participate in decisions to be made by the Senior Lenders as a group
pursuant to terms of the Master Security Agreement and the Completion Guarantee.

     Section 9.05 Limited Interference in Business of the Issuer. The Common
Representative shall coordinate its requests and other activities involving the
Issuer so as to avoid duplication of tasks on part of the Issuer and to avoid
any interference, other than what is strictly necessary, with the conduct of the
business of the Issuer.

     Section 9.06 Statutory Bondholder Remedies. Notwithstanding the Common
Representative's appointment herein to act on behalf of the Bondholders of each
Issue, each Bondholder shall retain the right to pursue its individual statutory
remedies, as provided in Section 326 and Section 328 of the General Corporate
Law except as set forth in Section 8.03 and Section 8.04 of this Indenture and
in Article V of the Master Security Agreement; provided that each Bondholder
shall notify the Common Representative, in writing, of the exercise of its
individual statutory remedies on the next Business Day following such exercise
of remedies.

     Section 9.07 Actions of Common Representative Binding on Present and Future
Bondholders. (a) Any legal proceedings instituted or pursued by the Common
Representative pursuant to this Indenture, the applicable Supplemental
Indenture, and/or Applicable Law shall be final and binding on all present and
future Bondholders of all present and future Issues; provided the foregoing
shall not be interpreted as precluding the exercise by any or all of the
Bondholders, present and future, of (i) the right to contest the validity of
resolutions adopted by the Bondholders in a meeting as provided in the General
Corporate Law and (ii) the right to terminate the Common Representative's
representation as provided in Section 92 of the Securities Market Law.


                                       63



     (b) Any actions, procedures or other acts taken by the Common
Representative in its performance of the resolutions adopted at a General
Meeting or Special Meeting, as the case may be, shall be final and binding on
(i) in the case of a General Meeting, all present and future Bondholders, and
(ii) in the case of a Special Meeting, all present and future Bondholders of the
applicable Issue, and, in each case, inclusive of dissidents and Bondholders who
failed to attend such meeting; provided that the foregoing shall not be
interpreted as precluding the exercise by present and future Bondholders of the
right to contest the validity of resolutions adopted by the Bondholders in a
meeting as provided in the General Corporate Law.

     Section 9.08 Events of Defaults. The Common Representative, upon receipt of
notice in accordance with the terms of this Indenture and/or any applicable
Supplemental Indenture of the occurrence of one or more Defaults described in
Section 8.01 of this Indenture, shall (a) verify the occurrence of such Default,
and in case of Default specified under Section 8.02(a) of this Indenture,
schedule a General Meeting as contemplated under Section 8.02(a) of this
Indenture, and (b) upon expiration of the applicable cure period, if any,
schedule a Special Meeting or General Meeting, as the case may be, in order to
allow the applicable Bondholders to make decisions as to the exercise of
remedies, as provided in Section 8.03 or Section 8.04, as the case may be. In
the event that a Special Meeting or General Meeting contemplated under Section
8.03 or Section 8.04 does not occur for whatever reason, the Common
Representative shall promptly notify the Issuer accordingly.

     Section 9.09 Obligations of the Common Representative Pursuant to
Applicable Law. Nothing contained within this Article IX should be interpreted
as limiting any of the obligations imposed by Applicable Law upon the Common
Representative.

     Section 9.10 Resignation of the Common Representative.

     (a) Subject to the provisions of this Section 9.10, the Common
Representative may elect to resign from its position as Common Representative on
behalf of Bondholders of all Issues anytime following the first Special Meeting
of the first Issue.

     (b) Upon electing to resign, the Common Representative shall inform the
Bondholders with respect thereto by a notice published in the official gazette
"El Peruano" and in any high-circulation newspaper in the city of Lima.
Likewise, the Common Representative shall notify the Issuer, in writing, of its
election to resign within three (3) Business Days following publication of the
aforementioned notice.

     (c) Concurrently with the publication of the notice to the Bondholder as
set forth in Section 9.10(b) above, the Common Representative shall schedule a
General Meeting to be held within ten (10) Business Days following publication
of such notice. At such General Meeting, the Common Representative shall inform
the Bondholders of the cause for its resignation.

     (d) The Common Representative shall continue to perform in such position
until the General Meeting scheduled pursuant to Section 9.10(c) above appoints a
successor common representative (a "SUCCESSOR REPRESENTATIVE"); provided that in
the event that such General Meeting fails to appoint a Successor Representative
within thirty (30)


                                       64



Business Days following the publication of the notice as set forth in Section
9.10(b) above, the Common Representative's appointment as such shall terminate
automatically.

     (e) In the event that the Common Representative's appointment as such
terminates automatically as set forth in Section 9.10(d) above, the Issuer shall
appoint a Successor Representative within twenty (20) Business Days following
such automatic termination of the Common Representative's appointment.

     (f) Any Successor Representative appointed pursuant to the terms of this
Indenture shall be subject to the provisions of this Indenture and all
Supplemental Indentures governing the rights and obligations of the Common
Representative.

     (g) The Common Representative shall not be held liable for any resignation
that it tenders in accordance with the terms of this Indenture.

     (h) Subject to Section 4.01 of this Indenture, in the event of a
resignation of the Common Representative pursuant to this Section 9.10, the
Issuer shall be responsible for the payment of all reasonable costs and expenses
arising from the appointment of the Successor Representative, including any
reasonable service fee due to such Successor Representative.

     Section 9.11 Removal of the Common Representative.

     (a) A General Meeting may resolve to remove the Common Representative with
or without cause by providing the Common Representative with written notice of
such removal.

     (b) The general procedures for scheduling a General Meeting set forth in
this Indenture shall apply for the scheduling of the General Meeting described
in Section 9.11(a) above, and the Common Representative shall not, under any
circumstances, refuse to schedule such General Meeting. However, notwithstanding
the foregoing, in the event that the Common Representative fails to schedule
such General Meeting in accordance with procedures set forth in this Indenture,
the Issuer shall schedule such General Meeting.

     (c) Unless otherwise resolved at the General Meeting described in Section
9.11(a) above, the Common Representative shall not chair such General Meeting.

     (d) In the event that the General Meeting described in Section 9.11(a)
above resolves to remove the Common Representative, the Common Representative
shall continue to perform in such position until such General Meeting appoints a
Successor Representative; provided that in the event that such General Meeting
fails to appoint a Successor Representative within thirty (30) Business Days
following its resolution to remove the Common Representative, the Common
Representative's appointment as such shall terminate automatically.

     (e) The General Meeting shall notify the Issuer, in writing, of the
resolution to remove the Common Representative and the appointment of the
Successor Representative on the next Business Day following such resolution or
appointment, as the case may be.


                                       65



     (f) In the event that the Common Representative is removed and replaced by
a Successor Representative pursuant to this Section 9.11, the Bondholders shall
be responsible for all costs and expenses arising from such removal and
replacement. The Issuer shall only be responsible for the payment of the
reasonable service fee of the Successor Representative; provided that payment of
any such fee by the Issuer shall be subject to the Expense Cap set forth in
Section 4.01(l) of this Indenture.

     Section 9.12 Dissolution of the Common Representative

     (a) In the event that the Common Representative enters into a process of
dissolution and winding up or is placed under intervention by the Banking and
Insurance Superintendence (Superintendencia de Banca, Seguros y AFP) or CONASEV,
as the case may be, one or more Bondholders representing no less than twenty
percent (20%) of the aggregate face value of the then-outstanding Bonds, through
a letter recorded by a Notary Public, may schedule a General Meeting, either
directly or indirectly through a representative, to remove the Common
Representative and appoint a Successor Representative.

     (b) The General Meeting scheduled pursuant to Section 9.12(a) above shall
notify the Issuer, in writing, of its resolution, if any, to remove the Common
Representative and the appointment of a Successor Representative.

     (c) The provisions of Section 9.10(d)-(h) shall apply to any appointment of
a Successor Representative pursuant to this Section 9.12.

     Section 9.13 Consultation with Counsel, etc. The Common Representative may
consult with, and obtain advice from, legal counsel and other experts, in
connection with the performance of its duties hereunder and it shall incur no
liability and shall be fully protected in acting in good faith in accordance
with the opinion and advice of such counsel and other experts (as to matters
within any such expert's field of expertise). The Common Representative shall
not be responsible for the negligence or misconduct of any counsel and other
experts selected by it without gross negligence or willful misconduct on its
part.

                                    ARTICLE X

                              BONDHOLDERS MEETINGS

     Section 10.01 Powers of the General Meeting. Any duly called and installed
General Meeting shall have the following powers:

     (a) Adopt (i) any of the resolutions described in Section 8.03 or Section
8.04, as the case may be, including, without limitation, instructing the Common
Representative to deliver to the Issuer (with a copy thereof to the
Administrative Agent) the applicable Notice of Indenture Event of Default in
order to commence the voting process relating to the potential exercise of
remedies under Article V of the Master Security Agreement, (ii) any further
resolutions instructing the Common Representative to participate in the exercise
of rights and remedies under Article V of the Master Security Agreement and/or
the Completion Guarantee and (iii) any resolution directing the Common
Representative to


                                       66



deliver to the Issuer (with a copy thereof to the Administrative Agent) a notice
that an Event of Default has ceased to exist.

     (b) To the extent permitted by Applicable Law, and with the consent of the
Issuer, agree to amend those terms and conditions that are applicable to all
Issues under this Indenture.

     (c) Adopt any of the resolutions (i) described in Section 9.10 relating to
the resignation of the Common Representative and (ii) described in Section 9.11
relating to the removal of the Common Representative and appointment of a
Successor Representative (in the event that such resolution accepts the
resignation or removal of the Common Representative, as the case may be).

     (d) Adopt resolutions directing the Common Representative to request an
audit and/or inspection of the Issuer (it being understood that the Bondholders
shall be responsible for all costs and expenses relating to such audit and/or
inspection); provided that such audit and/or inspection does not entail the
disclosure of proprietary information of third parties, prohibited or limited by
contract or by Applicable Law, or considered by the Issuer to be confidential
and not relevant to the Bondholders; provided further that in the event that the
Issuer refuses to allow such audit and/or inspection, the Issuer shall provide
the Common Representative with a written explanation for such refusal within
[15] Business Days of the Common Representative's request.

     (e) Adopt resolutions directing the Common Representative to deliver to the
Issuer a Notice of Ordinary Default.

     (f) Take any other action that is required by Applicable Law or which, with
the prior written consent of the Issuer, affects all Bondholders equally.

     (g) Adopt internal regulations for the General Meeting, if determined by
such meeting to be appropriate.

     (h) All additional powers set forth in this Indenture and those granted
pursuant to Applicable Law.

     Section 10.02 Powers of the Special Meeting. Any duly called and installed
Special Meeting of a specific Issue shall have the following powers:

     (a) Adopt (i) any of the resolutions described in Section 8.03 or Section
8.04, as the case may be, including, without limitation, directing the Common
Representative to (x) extend the cure period, if any, relating to the applicable
Default or (y) schedule a General Meeting at which Bondholders of all Issues
shall vote as to whether to direct the Common Representative to deliver the
applicable Notice of Indenture Event of Default to the Issuer (with a copy
thereof to the Administrative Agent) in order to commence the voting process
relating to the potential exercise of remedies pursuant to Article V of the
Master Security Agreement and/or the Completion Guarantee and (ii) any
resolution directing the Common Representative to deliver to the Issuer (with a
copy thereof to the Administrative Agent) a notice that an Event of Default has
ceased to exist.


                                       67



     (b) Approve the actions of the Common Representative with respect to such
Issue.

     (c) Adopt internal regulations for the Special Meeting, if determined by
such meeting to be appropriate.

     (d) To the extent permitted by Applicable Law, and with the consent of the
Issuer, agree to amend the terms and conditions of the Issue set forth in this
Indenture and/or the applicable Supplemental Indenture.

     (e) Arrange for the listing of the Bonds of such Issue in a centralized
trading mechanism other than a Session of the Lima Stock Exchange; provided that
the Bondholders of such Issue shall be responsible for the payment of all costs
and expenses relating to such a listing change.

     (f) Adopt resolutions instructing the Common Representative to schedule a
General Meeting at which the Bondholders of all Issues shall vote as to whether
to direct the Common Representative to request the performance of audits and
inspections of the Issuer, subject to the restrictions of Section 10.01(d).

     (g) All additional powers set forth in this Indenture and those granted
pursuant to Applicable Law.

     Section 10.03 Notice of a General Meeting or Special Meeting.

     (a) A General Meeting shall be scheduled by the Common Representative or
the Board of Directors of the Issuer when (i) required pursuant to the terms of
this Indenture and/or the applicable Supplemental Indenture; (ii) requested,
through a letter recorded by a Notary Public indicating the matters to be
discussed at such General Meeting, by on or more Bondholders representing no
less than twenty percent (20%) of the aggregate face value of the
then-outstanding Bonds; or (iii) deemed necessary by the Common Representative
or the Board of Directors of the Issuer.

     (b) A Special Meeting of a specific Issue shall be scheduled by the Common
Representative or the Board of Directors of the Issuer when (i) required
pursuant to the terms of this Indenture and/or the applicable Supplemental
Indenture; (ii) requested, through a letter recorded by a Notary Public
indicating the matters to be discussed at such Special Meeting, by one more
Bondholders representing no less than twenty percent (20%) of the aggregate face
value of the then-outstanding Bonds of such Issue; or (iii) deemed necessary by
the Common Representative or the Board of Directors of the Issuer.

     (c) Unless otherwise provided in this Indenture and/or the applicable
Supplemental Indenture, any General Meeting or Special Meeting, as the case may
be, shall be held within no less than [five (5)] Business Days and no more than
[thirty (30)] Business Days following: (i) in the case of a General Meeting or
Special Meeting, as the case may be, requested by one or more Bondholders as
provided herein, the date of such request; or, (ii) in the case of any other
event for scheduling a General Meeting or Special Meeting as provided in this
Indenture and/or the applicable Supplemental Indenture, the date of such event.


                                       68



     (d) The Common Representative shall provide the first notice of any General
Meeting or Special Meeting scheduled pursuant to this Section 10.03, through the
publication of two notices, one in the official gazette "El Peruano" and the
other in any high-circulation newspaper in Lima, indicating the date, time and
place for the first call of such meeting and the business to be transacted
thereat (it being understood that the Common Representative shall not be
required to take any other action for such purpose and that the Bondholders
shall not object to the sufficiency of notices published as described herein).
The notices described herein shall be published no less than [three (3)]
calendar days prior to the first call of the General Meeting or Special Meeting,
as the case may be, and shall contain the contemplated date for the second call,
which shall be ten (10) calendar days after the day of the first call, in the
event that the Bondholders attending the General Meeting or Special Meeting, as
the case may be, fail to satisfy the quorum requirements of this Indenture in
the first call. If the published notice does not indicate the date of the second
call, then an additional notice shall be published for such second call, which
notice shall meet the formalities set forth in this Section 10.03(d).

     Section 10.04 Quorum, Installation and Resolutions.

     (a) The Common Representative shall chair any General Meeting except as
otherwise provided in this Indenture or as otherwise determined by one or more
Bondholders present at a General Meeting that represent a simple majority of the
aggregate face value of the then-outstanding Bonds. The person designated by the
chairman of the General Meeting shall act as secretary.

     (b) The Common Representative shall chair any Special Meeting except as
otherwise provided in this Indenture or as otherwise determined by one or more
Bondholders present at a Special Meeting that represent a simple majority of the
aggregate face value of the then-outstanding Bonds of the applicable Issue. The
person designated by the chairman of the Special Meeting shall act as secretary.

     (c) For purposes of calculating the quorum requirements and majorities
applicable to a General Meeting or Special Meeting, as the case may be, the face
value of the then-outstanding Bonds shall be used. Therefore, each Bondholder
attending a General Meeting or Special Meeting, as the case may be, shall
represent an aggregate face value resulting from multiplying the number of Bonds
held in such Bondholder's name by the face value of such Bonds.

     (d) (i) The required quorum for a General Meeting to be duly installed on
first notice shall be Bondholders representing at least a simple majority of the
aggregate face value of the then-outstanding Bonds.

          (ii) The required quorum for a General Meeting to be duly installed on
     second notice shall be those Bondholders present at such General Meeting,
     either in person or by proxy.

     (e) (i) The required quorum for a Special Meeting to be duly installed on
first notice shall be Bondholders representing at least a simple majority of the
aggregate face value of the then-outstanding Bonds of the specific Issue.


                                       69



          (ii) The required quorum for a Special Meeting to be duly installed on
     second notice shall be those Bondholders present at such Special Meeting,
     either in person or by proxy.

     (f) Notwithstanding the provisions of this Indenture, any General Meeting
or Special Meeting, as the case may be, shall be deemed called and duly
installed without prior notice provided that, (i) in the case of a General
Meeting, all Bondholders and (ii) in the case of a Special Meeting, all
Bondholders of a specific Issue, are present, either in person or by proxy, and
unanimously consent to hold the meeting and the business to be transacted at
such meeting.

     (g) (i) Except as set forth in clause (ii) below, the resolutions of a
General Meeting or Special Meeting, as the case may be, shall be adopted
pursuant to the voting majorities set forth in Section 323 of the General
Corporate Law.

          (ii) Notwithstanding the foregoing, the voting majorities set forth in
     Sections 323 of the General Corporate Law shall be altered in the following
     circumstances:

               (A) The approval of Bondholders representing no less than
          sixty-six and two thirds percent (66 2/3%) of the aggregate face value
          of the then-outstanding Bonds of the applicable Issue shall be
          required in order to approve any resolution of a Special Meeting made
          pursuant to Section 8.03 (other than Section 8.03(b)) or Section 8.04
          (other than Section 8.04(b)) of this Indenture.

               (B) The approval of Bondholders representing no less than
          sixty-six and two thirds percent (66 2/3%) of the aggregate face value
          of the then-outstanding Bonds shall be required in order to approve
          any resolution of a General Meeting made pursuant to Section 8.03
          (other than Section 8.03(b)) or Section 8.04 (other than Section
          8.04(b)) of this Indenture, as the case may be.

               (C) With respect to Section 8.03(b) and Section 8.04(b), the
          approval of Bondholders representing no less than sixty-six and two
          thirds percent (66 2/3%) of (1) the aggregate face value of the
          then-outstanding Bonds of the applicable Issue (for the first call of
          the Special Meeting) or (2) the aggregate face value of the
          then-outstanding Bonds of the applicable Issue duly represented at the
          Special Meeting (for the second call of the Special Meeting) shall be
          required in order to approve any resolution of a Special Meeting
          scheduled pursuant to Section 8.03(b) or Section 8.04(b) of this
          Indenture.

               (D) With respect to Section 8.03(b) and Section 8.04(b), the
          approval of Bondholders representing no less than sixty-six and two
          thirds percent (66 2/3%) of the aggregate face value of (1) the
          then-outstanding Bonds (for the first call of the General Meeting) or
          (2) the aggregate face value of the then-outstanding Bonds duly
          represented (for the second call of the General


                                       70



          Meeting) shall be required in order to approve any resolution of a
          General Meeting scheduled pursuant to Section 8.03(b) or Section
          8.04(b) of this Indenture.

               (E) The unanimous approval of the Bondholders representing the
          aggregate face value of the then-outstanding Bonds of each affected
          Issue shall be required in order to approve the transfer or assignment
          by the Issuer of its rights and obligations under this Indenture,
          whether in whole or in part.

               (F) The approval of Bondholders representing no less than sixty
          percent (60%) of the aggregate face value of the then-outstanding
          Bonds shall be required in order to agree on the removal of Common
          Representative and the appointment of a Successor Representative, each
          pursuant to Section 9.11 of this Indenture.

          (iii) Any resolution approved by the Bondholders of a specific Issue
     that amends any terms and conditions of this Indenture or the applicable
     Supplemental Indenture, or modifies in any manner the rights of the
     Bondholders of such Issue shall not affect the rights of Bondholders of any
     other Issue under this Indenture or the applicable Supplemental Indentures.

     (h) For the purposes of determining the Bondholders who shall be permitted
to attend the General Meeting or Special Meeting, as the case may be, those
holders listed on the register kept by CAVALI two (2) Business Days prior to the
date set for the General Meeting or Special Meeting, as the case may be, shall
be considered Bondholders who are entitled to attend such meeting. In connection
with the due installation of the General Meeting or Special Meeting, as the case
may be, and the adoption of resolutions, the provisions in Section 323 of the
General Corporate Law shall apply to the extent that such provisions do not
conflict with the provisions of this Indenture.

     (i) The Bondholders identified pursuant to Section 10.04(h) above may
attend the General Meeting and shall be entitled to vote thereat; provided that
those Bondholders that have a conflict of interest with respect to decisions or
resolutions that are voted on at such General Meeting shall refrain from voting
on such matters.

     (j) The Bondholders of a specific Issue identified pursuant to Section
10.04(h) above may attend any Special Meeting of such Issue and shall be
entitled to vote thereat; provided that those Bondholders that have a conflict
of interest with respect to decisions or resolutions that are voted on at such
Special Meeting shall refrain from voting on such matters.

     (k) The Bondholders entitled to attend a General Meeting or Special
Meeting, as the case may be, may be represented through a simple proxy form
indicating the act for which such appointment is made. Any permanent delegation
of authority must be made by a public instrument.


                                       71



     (l) (i) The resolutions adopted at a General Meeting or Special Meeting, as
the case may be, shall be recorded in a duly legalized minutes book, and the
minutes shall be signed by the chairman and secretary of such meeting.

          (ii) When a General Meeting or Special Meeting, as the case may be, is
     not chaired by the Common Representative, recording of the minutes in the
     minutes book kept by the Common Representative, as well as the contents
     thereof, shall be under the sole responsibility of the person chairing such
     meeting.

                                   ARTICLE XI

                            ISSUER'S INDEMNIFICATION

     Section 11.01 Claims Indemnified. The Issuer shall indemnify and hold
harmless all of the Common Representative and any of its affiliates, officers,
directors, employees, agents or representatives (each, an "INDEMNITEE" and,
collectively, the "INDEMNITEES") from any legal action claim (whether in-court,
out-of-court or administrative), penalty, loss or liability, or expenditure,
including reasonable attorneys fees and personal defense costs (hereinafter, a
"CLAIM") resulting or arising from any of the activities of the Common
Representative contemplated in this Indenture and/or the Supplemental
Indentures.

     Section 11.02 Claims Excluded. Any Claim that is the result of the gross
negligence or willful misconduct of the Indemnitee, which such gross negligence
or willful misconduct shall be determined by a Court of Arbitration in
accordance with Article XII of this Indenture, shall be excluded from the
Issuer's agreement to indemnify any Indemnitee under Section 11.01 above.

     Section 11.03 Claim Procedure. (a) Each Indemnitee shall provide the Issuer
with written notice of any Claim against it together with a statement of such
Indemnitee stating in reasonable detail the basis for the indemnification sought
thereby. Further, each Indemnitee shall keep the Issuer informed of the status
of any Claim against it.

     (b) Promptly after the Issuer receives notification of a Claim pursuant to
subsection (a), the Issuer shall notify the applicable Indemnitee as to whether
it intends to pay, object to, compromise or defend any matter involving the
asserted liability of such Indemnitee. In the event that the Issuer elects to
defend a Claim against an Indemnitee, (i) such Indemnitee shall promptly grant
to the legal advisors designated by the Issuer the powers required to take on
such defense and (ii) the Issuer shall be responsible for the payment of all
costs and expenses relating to such defense, including the retention of legal
advisors; provided that the Indemnitee shall be entitled to retain its own legal
advisors; provided further that the Issuer shall be responsible for the payment
of the reasonable fees and expenses of the Indemnitee's legal advisors.

     (c) No Indemnitee may compromise or settle a Claim without the prior
written consent of the Issuer, which consent shall not be unreasonably withheld,
unless such Indemnitee waives its rights to indemnification hereunder.


                                       72



     Section 11.04 Issuer's Rights Under Applicable Law. The provisions of this
Article XI are not exclusive or limiting, and are not intended to preclude or
limit any right to which the Issuer may be entitled under Applicable Law to
exercise against any Indemnitee for damages that such Indemnitee may cause the
Issuer due to its gross negligence or willful misconduct.

                                   ARTICLE XII

                                   ARBITRATION

     Section 12.01 Resolution of Disputes Through Arbitration. (a) It being the
intent of the parties hereto that any conflicts or disputes that may arise in
relation to the performance of this Indenture or of the Supplemental Indentures,
as well as any matter related to the Program, be resolved as expeditiously as
possible, each of the parties hereby agrees that any lawsuit, dispute, claim or
disagreement in connection with the interpretation, performance, validity,
termination, effectiveness of, or arising from or in relation to, this
Indenture, the Supplemental Indentures or any other document materially relevant
to the Program that cannot be resolved by mutual agreement of the parties to
such dispute within fifteen (15) Business Days following the date on which one
of the parties to such dispute notifies the other in writing of the existence of
such dispute, then it shall be settled by arbitration of law (arbitraje de
derecho) according to the procedures set forth in this Article XII and
Applicable Law.

     (b) The arbitration proceedings regulated in this Article XII shall also
apply to the resolution of any conflict or dispute between the Issuer and
Bondholders and the Common Representative or any of them that may arise in
relation to the performance of this Indenture and/or the Supplemental
Indentures, as well as any matter related to the Program, provided that any
individual Bondholder may elect to resolve conflicts or disputes related to the
collection of payment of principal or interest of the Bonds through a summary
proceeding (proceso ejecutivo) as long as such an election by the individual
Bondholder is not in any manner inconsistent with any resolution with respect to
the same conflict or dispute reached at a Special Meeting or the General
Meeting, as the case may be, convened in accordance with Section 8.03 or Section
8.04 of this Indenture.

     Section 12.02 Arbitration Procedure. The aforementioned arbitration shall
be conducted according to the following procedures:

     (a) The arbitration shall take place in the city of Lima, by the
establishment of a court of arbitration (the "COURT OF ARBITRATION") which shall
consist of three (3) members to be appointed as follows: (i) each party shall
appoint an arbitrator of its choice and (ii) the two chosen arbitrators shall
appoint a third arbitrator, which such arbitrator shall preside over the Court
of Arbitration. Each of the parties hereby expressly authorize the arbitrators
to decide on the specific matter or matters subject to arbitration.

     (b) In the event that (i) either party fails to appoint an arbitrator as
provided in Section 12.02(a) above within fifteen (15) Business Days following
receipt of a notice informing such party of its obligation to appoint an
arbitrator or (ii) the two arbitrators


                                       73



chosen by the parties fail to appoint the final arbitrator within fifteen (15)
Business Days following the appointment of the second chosen arbitrator, any of
the parties may request the appointment of an arbitrator by the National and
International Settlement and Arbitration Center of the Lima Chamber of Commerce
(Centro de Conciliacion y Arbitraje Nacional e Internacional de la Camara de
Comercio de Lima).

     (c) In the event that the appointment of a substitute arbitrator becomes
necessary under any circumstance, such substitute arbitrator shall be appointed
pursuant to the procedure set forth in Section 12.02(b) above.

     (d) In the event that any party deems it necessary to seek the intervention
of ordinary judges and courts in an arbitration proceeding commenced pursuant to
this Article XII, including, without limitation, to request injunctive relief in
connection with such arbitration proceeding or execution of the arbitration
award, each of the parties hereby expressly submits to the jurisdiction of the
judges and courts of the judicial district of Lima, waiving the jurisdiction of
its respective place of business.

     (e) Any arbitration proceeding commenced pursuant to this Article XII shall
not exceed a period of sixty (60) Business Days following the date of
appointment of the last arbitrator and, to the extent not otherwise established
herein, shall be governed by the provisions of the National Arbitration
Regulations of the Center of National and International Settlement and
Arbitration of the Lima Chamber of Commerce or, otherwise, by Law No
26572, as amended or supplemented, as the case may be.

     (f) Any arbitration award shall be final and binding on the parties, and
each of the parties hereby waives its right to file any appeal relating to such
arbitration award other than for clarification thereof.

     (g) All costs and expenses incurred in the course of any arbitration
proceeding commenced pursuant to this Article XII shall be borne by the party
against whom the arbitration award is granted, including, without limitation,
the reasonable fees of such legal counsel and experts that each party may engage
in connection with such arbitration proceeding.

     (h) Nothing in this Article XII shall limit the provisions of Article IX of
the Master Security Agreement.

                                  ARTICLE XIII

                                  MISCELLANEOUS

     Section 13.01 Statement of Equivalence. Each of the parties hereto
expressly agrees that the respective considerations granted pursuant to this
Indenture are in strict equivalence, whereby this Indenture is entered in full
reciprocity of the obligations taken on by the parties hereto.

     Section 13.02 Notices. (a) All notices and other communications relating to
this Indenture and the Supplemental Indentures shall be made in writing and in
Spanish, and


                                       74



shall be sent to the addresses and facsimile numbers indicated below, or to such
other addresses and facsimile numbers as the party who desires to change them
indicates to the other parties to this Agreement by written notice and the date
on which such change shall become effective. All such notices shall be deemed
effectively given (i) on the delivery date, if hand-delivered; (ii) on the date
of receipt thereof, if sent by mail (with receipt acknowledgment); or (iii) on
the date of receipt thereof, if sent by facsimile (with written confirmation of
receipt, which confirmation may be by facsimile).

     (b) For the purposes of this Section 13.02, the parties indicate the
following addresses and facsimile numbers:

     IF TO THE ISSUER:                  Sociedad Minera Cerro Verde S.A.A.

                                        Av. Alfonso Ugarte 304
                                        Cercado - Arequipa
                                        Peru
                                        Attention: General Manager
                                        Telephone: (054) 283-363
                                        Facsimile: (054) 283-376

                                        with a copy to PDC, at:

                                        Phelps Dodge Tower
                                        1 North Central Avenue
                                        Phoenix, Arizona 85004
                                        U.S.A.
                                        Attention: Treasurer
                                        Telephone: (602) 366-8100
                                        Facsimile: (602) 366-8150
                                        Telex: 6502331665

     IF TO THE STRUCTURING ENTITY:      Citibank del Peru S.A.
                                        Av. Canaval y Moreyra 480, Piso 3
                                        San Isidro - Lima
                                        Peru
                                        Attention: Alberto Carrera Lung
                                        Telephone: (511) 215-2206
                                        Facsimile: (511) 421-4173


                                       75



     IF TO THE COMMON REPRESENTATIVE:   Citicorp Peru S.A. S.A.B.
                                        Av. Canaval y Moreyra 480, Piso 6
                                        San Isidro - Lima
                                        Peru
                                        Attention: Dennis Gray Febres
                                        Telephone: (511) 215-2201
                                        Facsimile: (511) 421-0556

     Section 13.03 Interpretation. In this Indenture, except to the extent that
the context otherwise requires:

     (a) The section headings and the table of contents are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.

     (b) Unless otherwise specified, all references herein to numbered articles,
sections and clauses are to articles, sections and clauses of this Indenture.

     (c) Unless otherwise specified, (i) all references to an article shall
include all section therein, (ii) all references to a section shall include all
sub-sections therein, and (iii) all references to a clause shall include all
sub-clauses therein.

     (d) Except as otherwise set forth herein or in the Supplemental Indentures,
any accounting term used in this Indenture or the Supplemental Indentures shall
have the meaning and scope pertaining thereto under Peruvian GAAP.

     Section 13.04 Severability. In the event that, due to a final and binding
decision issued by the competent legal authority, one or more provisions
contained herein are declared null or unenforceable, Section 224 of the Civil
Code shall apply. In such event, the parties shall negotiate and agree on the
provisions necessary to substitute those declared null or unenforceable;
provided that the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired by such declaration.

     Section 13.05 Governing Law. This Indenture and the Supplemental
Indentures are subject to the legal rules and provisions in force in the
Republic of Peru.

     Section 13.06 Public Instrument. This Indenture shall be entered as a
public instrument and any and all notary's fees and expenses arising therefrom
shall be borne by the Issuer.


                                       76



The Notary Public is requested to add any clauses required by law.

Lima, _______________, 2005

The ISSUER

- -------------------------------------
__________, General Manager
Sociedad Minera Cerro Verde S.A.A.


- -------------------------------------
__________, Financial Manager
Sociedad Minera Cerro Verde S.A.A.


The intervening STRUCTURING ENTITY


- -------------------------------------
_________________________
Attorney-in-Fact


The COMMON REPRESENTATIVE


- -------------------------------------
_________________________
Citicorp Peru S.A. S.A.B.


                                       77



                                   Schedule A

                                Committed Amounts



                                   Schedule B

                               Mining Concessions



                                  Schedule 6.04

                           Core Governmental Approval



                                  Schedule 6.05

                                      Taxes



                                  Schedule 6.09

                         Mining Benefits and Concessions



                                  Schedule 6.10

                             [Environmental Matters]



                                  Schedule 6.11

                                 [Labor Matters]



                                  Schedule 6.12

                                   [Consents]



                                                                       EXHIBIT E

                 Form of Debt Service Coverage Ratio Certificate

     I, [NAME OF AUTHORIZED OFFICER], do hereby certify that I am the duly
elected and qualified [title of Authorized Officer] of SOCIEDAD MINERA CERRO
VERDE S.A.A., a sociedad anonima abierta organized under the laws of Peru (the
"BORROWER"), acting as Borrower under the Master Participation Agreement among
the Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, and the
Administrative Agent, dated _________ (the "MASTER PARTICIPATION AGREEMENT") and
that as such I am authorized to execute and deliver this certificate on behalf
of the Borrower. Capitalized terms used herein without definition shall have the
respective meanings specified in Schedule Z to the Master Participation
Agreement.

     This certificate is delivered pursuant to Section 7.05(f) of the Master
Participation Agreement.

     I certify to the Administrative Agent, for and on behalf of the Senior
Facility Lenders, that the Debt Service Coverage Ratio as of the last day of the
Calculation Period ending on _____________ is as follows:

__________________



     IN WITNESS WHEREOF, I have hereunto signed my name this __ day of _______,
20__.

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                                                       EXHIBIT F

        FORM OF TRANSFEREE ACCESSION, ASSIGNMENT AND ASSUMPTION AGREEMENT

     Reference is made to the Master Participation Agreement between the
Borrower, Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch,
The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho Corporate
Bank Ltd., dated September 30, 2005 (as amended from time to time, the "Master
Participation Agreement" or "MPA") and the Senior Facility Loan Agreement
between the Assignor and the Borrower dated September 30, 2005 (as amended from
time to time, the "Loan Agreement"). Capitalized terms used but not defined
herein shall have the meanings assigned to them in Schedule Z to the Master
Security Agreement dated as of September 30, 2005 among Sociedad Minera Cerro
Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui Banking
Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch,
The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho Corporate Bank,
Ltd., Citibank, N.A., and Citibank del Peru (as amended from time to time, the
"Master Security Agreement" or "MSA"). The rules of interpretation as set forth
in Section 1.02 of the MPA are incorporated by reference as if set forth at
length herein.

     1. ___________ (the "Assignor") hereby sells and assigns to _____________
(the "Assignee") without recourse to the Assignor, and the Assignee hereby
purchases and assumes from the Assignor without recourse to the Assignor, the
interests set forth on Schedule A hereto (the "Assigned Interest") in the
Assignor's rights and obligations under the Assigned Agreements (as defined
below) or any other instrument or document furnished pursuant thereto,
including, without limitation, [a portion of] the Advances which are outstanding
on the Assignment Date (as defined below) as listed in Schedule A hereto, but
excluding accrued interest and fees to and excluding the Assignment Date.

     2. The assignment and assumption executed hereby is made pursuant to and in
accordance with Section 12.13(c) of the MPA.

     3. This executed and delivered Transferee Accession, Assignment and
Assumption Agreement becomes effective upon the later of (a) the acknowledgement
by the Administrative Agent or (b) the consent of the Borrower, if applicable
(the "Assignment Date").

     4. Upon effectiveness of this Transferee Accession, Assignment and
Assumption Agreement, the Assignee shall be a party to and be bound by the
provisions of the Loan Agreement, the Master Participation Agreement, the Master
Security Agreement, the Completion Guarantee and the Transfer Restriction
Agreement (the "Assigned Agreements"), and, to the extent of the Assigned
Interest, have the rights, obligations and benefits of the Assignor thereunder
and under any other instrument or



document furnished pursuant thereto holding the Advances (or portion(s) thereof)
set forth on Schedule A hereto.

     5. The Assignor shall, to the extent of the Assigned Interest and
obligations assumed hereby, relinquish its rights and be released from its
obligations under the Assigned Agreements and any other instrument or document
furnished pursuant thereto, it being understood that the Assignor shall continue
to enjoy all rights of indemnification that have occurred prior to the
Assignment Date.

     6. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Assigned Agreements or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Assigned Agreements or any other instrument or document furnished pursuant
thereto and (b) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of their obligations under the
Assigned Agreements or any other instrument or document furnished pursuant
thereto.

     7. The Assignee (a) represents and warrants that (i) it has full power and
authority to execute and deliver this Transferee Accession, Assignment and
Assumption Agreement and that this Transferee Accession, Assignment and
Assumption Agreement has been duly authorized, executed and delivered by it and
constitutes a valid and legally binding agreement, enforceable in accordance
with its terms and (ii) there is no provision of law, statute, regulation, rule,
order, injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Agreement, (b) confirms that it has received a copy of the Assigned
Agreements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Transferee
Accession, Assignment and Assumption Agreement, (c) agrees that it will,
independently and without reliance upon the Trustee, the Administrative Agent,
the Assignor, any other Senior Facility Lender or any other Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Assigned Agreements or any other instruments or documents furnished pursuant
thereto, (d) appoints and authorizes the Trustee, the Administrative Agent, the
Onshore Collateral Agent and the Offshore Collateral Agent, respectively (the
"Agents"), to take such action as agent on its behalf and to exercise such
powers and discretion under the Assigned Agreements or any other instrument or
document furnished pursuant thereto as are delegated to the Agents by the terms
thereof, together with such powers as are incidental thereto, (e) agrees that it
will be bound by the provisions of, and will perform in accordance with their
terms all of the obligations which by the terms of the


                                        2



Assigned Agreements or any other instrument or document furnished pursuant
thereto are required to be performed by it as the assignee of the Assignor's
obligations, (f) agrees that the Borrower shall not be required to assume any
obligations or costs under the Financing Documents, including any Indemnified
Taxes or Other Taxes or any withholding tax liability, with respect to the
Assignee in excess of such obligations or costs the Borrower is required to
assume under the Financing Documents with respect to the Assignor, (g) agrees
that the Parent Companies shall not be required to assume any obligations or
costs under the Financing Documents, including any Indemnified Taxes or Other
Taxes or any withholding tax liability, with respect to the Assignee in excess
of the obligations or costs the Parent Companies are required to assume under
the Financing Documents with respect to the Assignor, and (h) specifies as its
lending offices (and address for notices) the offices set forth beneath its name
on the signature pages hereof.

     8. From and after the Assignment Date, the Trustee and the Administrative
Agent, as applicable, shall make all payments under the Assigned Agreements or
any other instrument or document furnished pursuant thereto in respect of the
interest assigned hereby (including, without limitation, all payments of
principal, interest, fees or other amounts) to the Assignee. The Assignor and
the Assignee shall make all appropriate adjustments in payments under the
Assigned Agreements or any other instrument or document furnished pursuant
thereto for periods prior to the Assignment Date directly between themselves.

     9. Pursuant to Section 2.08(d) of the MPA, upon the occurrence of the
Assignment Date, the Promissory Note of the Assignor may be cancelled, in which
case the Borrower shall, upon the written request of the Assignor, issue new
Promissory Notes to the Assignor and Assignee, in each case in principal amounts
reflecting their Advances as set forth in Schedule A.

     10. (a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns; (b)
the representations and warranties and agreements made herein by the Assignee
are also made for the benefit of the Senior Facility Lenders, the Agents, the
Parent Companies and the Borrower, and the Assignee agrees that the Senior
Facility Lenders, the Agents, the Parent Companies and the Borrower are entitled
to rely upon such representations and warranties, (c) any future assignment of
this Agreement shall be in accordance with the terms and conditions set forth in
Section 12.13(c) MPA and (d) no party to this Agreement may amend any of its
rights or obligations hereunder without the prior written consent of the other
party hereto, the acknowledgement thereof by the Administrative Agent and the
consent of the Borrower, if applicable, provided that such amendment shall
comply in all events with the conditions set forth in Section 12.13(c) MPA.

     11. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                                        3



     12. This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and shall be binding upon all parties
hereto, and their successors and assigns.

     13. If any provision of this agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions in such jurisdiction and the validity, legality and enforceability of
such provision in any other jurisdiction shall not in any way be affected or
impaired.

                             [SIGNATURES TO FOLLOW]


                                       4



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

                                        [ASSIGNOR]


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        [ASSIGNEE]


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


ACKNOWLEDGED AS OF ___________:

CALYON NEW YORK BRANCH, as Administrative Agent


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


CONSENTED TO AS OF ___________:

SOCIEDAD MINERA CERRO VERDE S.A.A.


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       5



                                                                      SCHEDULE A

Date of Assignment: ______________________________

Legal Name of Assignor: __________________________

Legal Name of Assignee: __________________________

Assignee's Address for Notices: __________________

Amount of Assigned Advances: _____________________

Assignor's Total Advances Outstanding as of the Assignment Date: _______________

Assignee's Total Advances Outstanding as of the Assignment Date: _______________


                                       6



                                    Exhibit G

                      Form of New Party Accession Agreement



                                                                     EXHIBIT G-1

                      FORM OF NEW PARTY ACCESSION AGREEMENT

This NEW PARTY ACCESSION AGREEMENT, dated as of __ (the "Agreement"), is made
among __ (the "Replacement Lender"), Calyon New York Branch, as administrative
agent for the Senior Facility Lenders (the "Administrative Agent") and Sociedad
Minera Cerro Verde S.A.A., a sociedad anonima abierta listed on the Lima Stock
Exchange and organized under the laws of the Republic of Peru (the "Borrower").

                                    RECITALS

     A. On September 30, 2005 the Borrower, Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank Ltd. have entered into a Master
Participation Agreement (as amended from time to time, the "Master Participation
Agreement" or "MPA"), which sets forth various terms for the financing of the
development of the Sulfide Project;

     B. On September 30, 2005 the Borrower entered into a Master Security
Agreement among the Borrower, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A. as trustee and offshore collateral agent,
and Citibank del Peru, as onshore collateral agent (as amended from time to
time, the "Master Security Agreement" or "MSA").

     C. On September 30, 2005, the Borrower entered into a Completion Guarantee
among the Parent Companies, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho
Corporate Bank, Ltd. (as amended from time to time, the "Completion Guarantee").

     D. On __ [JBIC] [KfW] has [suspended] [cancelled] [terminated] its
Commitment and on __ the Borrower and the Replacement Lender, a __ have entered
into a Replacement Loan Agreement.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:



     1. Accession.

          a. Accession. As of the date hereof, the Replacement Lender shall
          become a party to the Master Participation Agreement, the Master
          Security Agreement, the Transfer Restrictions Agreement and the
          Completion Guarantee and shall have all of the rights and obligations
          of the Suspending Lender under the Master Participation Agreement, the
          Master Security Agreement, the Transfer Restrictions Agreement, the
          Completion Guarantee and any other instruments and documents furnished
          pursuant thereto.

          b. Compliance. This accession to the Master Participation Agreement,
          the Master Security Agreement, the Transfer Restrictions Agreement and
          the Completion Guarantee is made pursuant to and in accordance with
          Section 12.02 of the MPA, Section 9.01(b) of the MSA, Section 4.02 of
          the Transfer Restrictions Agreement and Section 9.02(b) of the
          Completion Guarantee.

     2. Additional Actions of the Replacement Lender. As of the date hereof the
Replacement Lender (a) represents and warrants that (i) it has full power and
authority to execute and deliver this Agreement and that this Agreement has been
duly authorized, executed and delivered by it and constitutes a valid and
legally binding agreement, enforceable in accordance with its terms and (ii)
there is no provision of law, statute, regulation, rule, order, injunction,
decree, writ or judgment, no provision of its organizational documents and no
provision of any mortgage, indenture, contract or agreement binding on it or
affecting its properties, which would prohibit, conflict with or in any way
prevent its execution, delivery, or performance of the terms of this Agreement;
(b) confirms that it has received a copy of such documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement; (c) agrees that it will, independently and without reliance
upon the Borrower, the Administrative Agent, any Senior Lender or any other
Person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Master Participation Agreement, the Master Security Agreement,
the Transfer Restrictions Agreement, the Completion Guarantee or any other
instruments and documents furnished pursuant thereto; (d) appoints and
authorizes the Administrative Agent, the Trustee, the Onshore Collateral Agent
and the Offshore Collateral Agent (the "Agents"), pursuant to and in accordance
with Article VI of the MSA, to take such actions as agents on its behalf and to
exercise such powers under the Master Participation Agreement, the Master
Security Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement or any other instruments and documents furnished pursuant thereto as
are delegated to the Agents by the terms thereof, in each case, together with
such powers as are incidental thereto and (e) agrees that it will be bound by
the provisions of, and will perform in


                                       2



accordance with their terms all of the obligations which by the terms of the
Master Participation Agreement, the Master Security Agreement, the Transfer
Restrictions Agreement and the Completion Guarantee or any other instrument or
document furnished pursuant thereto are required to be performed by it as a
Senior Lender.

     3. Terms of Replacement Loan Agreement. Borrower hereby certifies that the
terms and conditions of the Replacement Loan Agreement regarding disbursement
proceedings, repayment and prepayment obligations, place, date and time of
payments, currency, assignment and the Administrative Agent, are no less
favorable to the Borrower then the terms and conditions of the replaced [JBIC]
[KfW] Senior Facility Loan Agreement.

     4. No Voting Rights. In the event that the Replacement Lender is a Parent
Company or any Affiliate thereof, the Replacement Lender acknowledges that it is
not entitled to any voting rights under the Master Participation Agreement, the
Master Security Agreement, the Transfer Restrictions Agreement and the
Completion Guarantee or any other instrument or document furnished pursuant
thereto.

     5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
LAWS OF THE STATE OF NEW YORK.

     6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties hereto, and their successors and assigns.

     7. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any way
be affected or impaired.

     8. Definitions and Interpretation. Capitalized terms used but not defined
herein shall have the meanings assigned to them in Schedule Z of the MSA. The
rules of interpretation as set forth in Section 1.02 of the MPA are incorporated
by reference as if set forth at length herein.

     9. Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for


                                       3



this purpose by such party (any such communication that is not in writing shall
be confirmed in writing):

          If to the Replacement Lender, at: __

          If to the Administrative Agent, at:

          CALYON New York Branch
          1301 Avenue of the Americas
          New York, New York 10019
          Attention: Ted Vandermel
          Telephone: (212) 261-7888
          Facsimile: (212) 261-3421

          If to the Borrower, at:

          c/o Asiento Minero Cerro Verde
          Uchumayo (Arequipa/Peru), Casilla Postal #299
          Shipping: Av. Alfonso Ugarte #304
          Cercado, Arequipa, Republic of Peru
          Attention: General Manager
          Telephone: (054) 283-363
          Facsimile: (054) 283-376

                             [SIGNATURES TO FOLLOW]


                                       4



     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above stated.

                                        [REPLACEMENT LENDER]


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


SOCIEDAD MINERA CERRO VERDE S.A.A.,
in its capacity as Borrower


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


CALYON New York Branch, in its
capacity as Administrative Agent


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       5



                                                                     EXHIBIT G-2

                      FORM OF NEW PARTY ACCESSION AGREEMENT

This NEW PARTY ACCESSION AGREEMENT, dated as of __ (the "Agreement"), is made
among __ (the "Bridge Loan Provider"), Calyon New York Branch, as administrative
agent for the Senior Facility Lenders (the "Administrative Agent") and Sociedad
Minera Cerro Verde S.A.A., a sociedad anonima abierta listed on the Lima Stock
Exchange and organized under the laws of the Republic of Peru (the "Borrower").

                                    RECITALS

     A. On September 30, 2005 the Borrower, Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank Ltd. have entered into a Master
Participation Agreement (as amended from time to time, the "Master Participation
Agreement" or "MPA"), which sets forth various terms for the financing of the
development of the Sulfide Project;

     B. On September 30, 2005 the Borrower entered into a Master Security
Agreement among the Borrower, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A. as trustee and offshore collateral agent,
and Citibank del Peru, as onshore collateral agent (as amended from time to
time, the "Master Security Agreement" or "MSA").

     C. On September 30, 2005 the Borrower entered into a Completion Guarantee
among the Parent Companies, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho
Corporate Bank, Ltd. (as amended from time to time, the "Completion Guarantee").

     D. On __ [JBIC] [KfW] has [suspended] [cancelled] [terminated] its
Commitment and on __ the Borrower and the Bridge Loan Provider, a __ have
entered into a Bridge Loan Agreement.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:



     1. Accession.

          a. Accession. As of the date hereof, the Bridge Loan Provider shall
          become a party to the Master Participation Agreement, the Master
          Security Agreement, the Transfer Restrictions Agreement and the
          Completion Guarantee and shall have all of the rights and obligations
          of the Suspending Lender under the Master Participation Agreement, the
          Master Security Agreement, the Transfer Restrictions Agreement, the
          Completion Guarantee and any other instruments and documents furnished
          pursuant thereto.

          b. Compliance. This accession to the Master Participation Agreement,
          the Master Security Agreement, the Transfer Restrictions Agreement and
          the Completion Guarantee is made pursuant to and in accordance with
          Section 12.02 of the MPA, Section 9.01(b) of the MSA, Section 4.02 of
          the Transfer Restrictions Agreement and Section 9.02(b) of the
          Completion Guarantee.

     2. Additional Actions of the Bridge Loan Provider. As of the date hereof
the Bridge Loan Provider (a) represents and warrants that (i) it has full power
and authority to execute and deliver this Agreement and that this Agreement has
been duly authorized, executed and delivered by it and constitutes a valid and
legally binding agreement, enforceable in accordance with its terms and (ii)
there is no provision of law, statute, regulation, rule, order, injunction,
decree, writ or judgment, no provision of its organizational documents and no
provision of any mortgage, indenture, contract or agreement binding on it or
affecting its properties, which would prohibit, conflict with or in any way
prevent its execution, delivery, or performance of the terms of this Agreement;
(b) confirms that it has received a copy of such documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Agreement; (c) agrees that it will, independently and without reliance
upon the Borrower, the Administrative Agent, any Senior Lender or any other
Person and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Master Participation Agreement, the Master Security Agreement,
the Transfer Restrictions Agreement, the Completion Guarantee or any other
instruments and documents furnished pursuant thereto; (d) appoints and
authorizes the Administrative Agent, the Trustee, the Onshore Collateral Agent
and the Offshore Collateral Agent (the "Agents"), pursuant to and in accordance
with Article VI of the MSA, to take such actions as agents on its behalf and to
exercise such powers under the Master Participation Agreement, the Master
Security Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement or any other instruments and documents furnished pursuant thereto as
are delegated to the Agents by the terms thereof, in each case, together with
such powers as are incidental thereto and (e) agrees that it will be bound by
the provisions of, and will perform in


                                       2



accordance with their terms all of the obligations which by the terms of the
Master Participation Agreement, the Master Security Agreement, the Transfer
Restrictions Agreement and the Completion Guarantee or any other instrument or
document furnished pursuant thereto are required to be performed by it as a
Senior Lender.

     3. Terms of Bridge Loan Agreement. Borrower hereby certifies that the terms
and conditions of the Bridge Loan Agreement regarding repayment and prepayment
obligations, place and time of payments, currency, assignment and the
Administrative Agent, if applicable, are not less favorable to the Borrower than
the terms and conditions of the bridged [KfW] [JBIC] Senior Facility Loan
Agreement.

     4. No Voting Rights. In the event that the Bridge Loan Provider is a Parent
Company or any Affiliate thereof, the Bridge Loan Provider acknowledges that it
is not entitled to any voting rights under the Master Participation Agreement,
the Master Security Agreement, the Transfer Restrictions Agreement and the
Completion Guarantee or any other instrument or document furnished pursuant
thereto.

     5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
LAWS OF THE STATE OF NEW YORK.

     6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties hereto, and their successors and assigns.

     7. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions in such jurisdiction and the validity, legality and
enforceability of such provision in any other jurisdiction shall not in any way
be affected or impaired.

     8. Definitions and Interpretation. Capitalized terms used but not defined
herein shall have the meanings assigned to them in Schedule Z of the MSA. The
rules of interpretation as set forth in Section 1.02 of the MPA are incorporated
by reference as if set forth at length herein.

     9. Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for


                                       3



this purpose by such party (any such communication that is not in writing shall
be confirmed in writing):

          If to the Bridge Loan Provider, at: __

          If to the Administrative Agent, at:

          CALYON New York Branch
          1301 Avenue of the Americas
          New York, New York 10019
          Attention: Ted Vandermel
          Telephone: (212) 261-7888
          Facsimile: (212) 261-3421

          If to the Borrower, at:

          c/o Asiento Minero Cerro Verde
          Uchumayo (Arequipa/Peru), Casilla Postal #299
          Shipping: Av. Alfonso Ugarte #304
          Cercado, Arequipa, Republic of Peru
          Attention: General Manager
          Telephone: (054) 283-363
          Facsimile: (054) 283-376

                             [SIGNATURES TO FOLLOW]


                                       4



     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above stated.

                                        [BRIDGE LOAN PROVIDER]


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


SOCIEDAD MINERA CERRO VERDE S.A.A.,
in its capacity as Borrower


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


CALYON NEW YORK BRANCH, in its
capacity as Administrative Agent


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       5



                                   Exhibit H-1

              Form of Consent to Assignment - Operator's Agreement



================================================================================

                              CONSENT AND AGREEMENT

                         Dated as of September 30, 2005

                               made by and between

                       MINERA PHELPS DODGE DEL PERU S.A.C.
                      (a Peruvian sociedad anonima abierta)

                                       and

                                 CITIBANK, N.A.,
                          as Offshore Collateral Agent

================================================================================



     This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and between MINERA PHELPS DODGE DEL PERU S.A.C., a Peruvian
sociedad anonima abierta (the "Consenting Party") and CITIBANK, N.A., in its
capacity as Offshore Collateral Agent under the Master Security Agreement (the
"Offshore Collateral Agent").

                                   WITNESSETH

WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;

WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Operator's Agreement to the Offshore Collateral Agent for the benefit and
on behalf of the Senior Lenders; and

WHEREAS, as a further condition to the Senior Lenders extending Senior Loans to
the Borrower, the Borrower shall deliver a consent to such collateral assignment
from the counterparty to the Operator's Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Consenting Party and the Offshore
Collateral Agent agree as follows:

     1. Definitions. Each capitalized term used herein and not otherwise defined
herein shall have the definition assigned to such term in Schedule Z to the
Master Security Agreement dated as of September 30, 2005 among Sociedad Minera
Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui
Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York
Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru (as amended from
time to time, the "Master Security Agreement" or "MSA"). The rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
are incorporated herein as if set forth herein.

     2. Representations and Warranties. The Consenting Party hereby represents
and warrants that:

          (a) It is an entity duly organized, validly existing and is in good
     standing under the laws of the place in which it is organized.

          (b) It has full power and authority to execute and deliver the
     Operator's Agreement and this Consent and to perform its obligations
     thereunder



     and hereunder in accordance with the terms provided therein and herein and
     will not require any additional consent or approval of its board of
     directors, any of its shareholders or any other Person which it has not
     already obtained.

          (c) Each of the Operator's Agreement and this Consent has been duly
     authorized, executed and delivered by it and constitutes a valid and
     legally binding agreement, enforceable in accordance with its terms,
     subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
     moratorium and similar laws of general applicability relating to or
     affecting creditors' rights and to general equity principles.

          (d) All Governmental Approvals and other third party approvals which
     are necessary for (i) the execution and delivery by it of the Operator's
     Agreement and this Consent, (ii) the performance of its obligations
     thereunder and hereunder and (iii) the exercise by the Offshore Collateral
     Agent of the rights and remedies with respect to the Operator's Agreement
     (other than Governmental Approvals, if any, required to transfer the
     Operator's Agreement to the Offshore Collateral Agent or its assignees)
     have been obtained and are in full force and effect.

          (e) There is no provision of law, statute, regulation, rule, order,
     injunction, decree, writ or judgment, no provision of its organizational
     documents and no provision of any mortgage, indenture, contract or
     agreement binding on it or affecting its properties, which would prohibit,
     conflict with or in any way prevent its execution, delivery, or performance
     of the terms of the Operator's Agreement or this Consent.

          (f) There is no action, suit, proceeding or investigation, at law or
     in equity, or before any Governmental Authority or other Person, pending
     or, to the best knowledge of the Consenting Party, threatened, against or
     affecting it or its assets that (i) questions the validity of the
     Operator's Agreement or this Consent or any action taken or to be taken
     pursuant hereto or thereto, or (ii) in any case or in the aggregate would
     reasonably be expected to result in a material adverse effect on the
     ability of the Consenting Party to perform its obligations hereunder or
     thereunder.

          (g) The Consenting Party is not in default under any material covenant
     or obligation under the Operator's Agreement and no such default has
     occurred prior to the date hereof. To the best knowledge of the Consenting
     Party, the Borrower is not in default under any material covenant or
     obligation under the Operator's Agreement and no such default has occurred
     prior to the date hereof. The Consenting Party and, to the best of its
     knowledge, the Borrower, have complied with all conditions precedent to the
     respective obligations of such party to perform under the Operator's
     Agreement. The Operator's Agreement, as of the


                                        2



     date hereof, is in full force and effect, has not been amended, and none of
     the Borrower's rights under the Operator's Agreement have been waived.

     3. Consent and Agreement. The Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Operator's Agreement:

          (a) Pursuant to the Master Security Agreement, the Borrower has
     granted, transferred and assigned to the Offshore Collateral Agent, as
     collateral agent for the benefit of Senior Lenders named in the Master
     Security Agreement, all right, title and interest which Borrower now has or
     which shall hereafter arise in and to the Operator's Agreement and all
     claims resulting from any failure of performance or compliance with any of
     the provisions of the Operator's Agreement, together with full power and
     authority, in its own name or in the name of Borrower or otherwise, to
     enforce and request payment under the Operator's Agreement and to collect,
     receive and give receipts and releases for such amounts.

          (b) The Consenting Party hereby irrevocably consents to and accepts
     the grant, transfer and assignment by the Borrower to the Offshore
     Collateral Agent for the benefit of and on behalf of the Senior Lenders of
     all of Borrower's right, title and interest in the Operator's Agreement and
     all claims resulting from any failure of performance or compliance with any
     of the provisions of the Operator's Agreement, together with full power and
     authority, in the name of the Borrower, to enforce the Operator's Agreement
     against the Consenting Party, it being understood and agreed that any
     enforcement by the Offshore Collateral Agent shall not require any further
     consent from the Consenting Party or constitute a default under the
     Operator's Agreement. The Consenting Party hereby irrevocably further
     agrees for the benefit of the Offshore Collateral Agent and the Senior
     Lenders in case of a default under the Operator's Agreement by the
     Borrower, to accept performance by a Person designated by the Offshore
     Collateral Agent (or one or more of its representatives or assignees (the
     "Designee"), as instructed by the Administrative Agent) and neither the
     Offshore Collateral Agent nor its Designee shall be subject to any defense
     arising from the Borrower's failure to perform, provided that the
     Designee's performance shall in all other respects be in accordance with
     the provisions of the Operator's Agreement. In no event shall any grant,
     transfer, assignment or acceptance of performance pursuant to this Section
     3(b) change or modify Borrower's obligations to the Consenting Party
     thereunder.

          (c) The Consenting Party shall deliver to the Offshore Collateral
     Agent at the address specified in Section 5(j), or at such other address as
     the Offshore Collateral Agent may designate in writing from time to time to
     the Consenting Party, concurrently with delivery thereof to the Borrower, a
     copy of any material notice, request, demand or other document given by the
     Consenting


                                        3



     Party in connection with the Operator's Agreement, along with notice of any
     material breach, termination or claim of termination under the Operator's
     Agreement for which notice to the Borrower is required under the Operator's
     Agreement.

          (d) The Consenting Party will not, without the prior written consent
     of the Supermajority Facility Lenders, take any action to (i) except as
     expressly provided in the Operator's Agreement, cancel or terminate, or
     suspend performance under, the Operator's Agreement or consent to or accept
     any cancellation, termination or suspension thereof, (ii) exercise any of
     its rights set forth in the Operator's Agreement to cancel or terminate, or
     suspend or discontinue performance or withhold deliveries under, the
     Operator's Agreement unless the Consenting Party shall have delivered to
     the Offshore Collateral Agent and each Senior Lender written notice stating
     that it intends to exercise such right on a date not less than 30 days
     after the date of such notice, specifying the nature of the default giving
     rise to such right (and, in the case of a payment default, specifying the
     amount thereof) and permitting the Offshore Collateral Agent or its
     Designee on behalf of the Senior Lenders to cure such default by making a
     payment in the amount in default or by performing or causing to be
     performed the obligation in default (or if such default is not capable of
     being cured within said time, then diligently and continuously pursuing all
     reasonable actions necessary to effect cure), (iii) amend, supplement or
     otherwise modify the Operator's Agreement (as in effect on the date hereof)
     unless such amendment or modification would be permitted by Section 7.12 of
     the Master Participation Agreement or (iv) petition, request or take any
     other legal or administrative action which seeks, or may reasonably be
     expected, to rescind, terminate or suspend or amend or modify the
     Operator's Agreement or any part thereof, other than to enforce rights to
     which the Consenting Party is entitled pursuant to clause (i) or (ii) of
     this paragraph. In furtherance of the foregoing clause (ii), the Consenting
     Party agrees that, notwithstanding anything contained in the Operator's
     Agreement to the contrary, upon the occurrence of a default under the
     Operator's Agreement that cannot by its nature be cured by the payment of
     money, the Consenting Party will not cancel or terminate the Operator's
     Agreement if, and for so long as, the Offshore Collateral Agent shall be
     diligently seeking to institute foreclosure proceedings, or to acquire the
     Borrower's interest in the Operator's Agreement, and the Consenting Party
     shall grant the Offshore Collateral Agent a reasonable period of time to
     cure such default upon the occurrence of such foreclosure or acquisition.

          (e) In the event that (i) the Operator's Agreement is rejected by a
     trustee or debtor-in-possession in any bankruptcy or insolvency proceeding
     involving the Borrower or (ii) the Operator's Agreement is terminated as a
     result of any bankruptcy or insolvency proceeding involving the Borrower
     and, if within


                                        4



     60 days after notice by the Consenting Party to the Offshore Collateral
     Agent of such rejection or termination, the Offshore Collateral Agent or
     its Designee shall so request and shall certify in writing to the
     Consenting Party that such party intends to perform the obligations of the
     Borrower as and to the extent required under the Operator's Agreement and
     such Designee is sufficiently creditworthy to perform the obligations of
     the Borrower under the Operator's Agreement, the Consenting Party will
     execute and deliver to the Offshore Collateral Agent or such Designee a new
     Operator's Agreement which shall be for the balance of the remaining term
     under the original Operator's Agreement before giving effect to such
     rejection or termination and shall contain the same conditions, agreements,
     terms, provisions and limitations as the agreements, terms, provisions and
     limitations as the original Operator's Agreement (except for any
     requirements which have been fulfilled by the Borrower and the Consenting
     Party prior to such rejection or termination). References in this Consent
     and Agreement to such "Operator's Agreement" shall be deemed also to refer
     to such new Operator's Agreement.

          (f) The Consenting Party and the Borrower hereby further acknowledge
     and agree that the Consenting Party will not, without the prior written
     consent of the Supermajority Facility Lenders, sell, assign, transfer or
     otherwise dispose of (by operation of law or otherwise) any part of its
     interest in the Operator's Agreement; provided, that in no event shall the
     Consenting Party sell, assign, transfer or otherwise dispose of any part of
     its interest in the Operator's Agreement to any Person unless such Person
     is a wholly-owned direct or indirect subsidiary of Phelps Dodge Corporation
     or is another entity satisfactory to the Supermajority Facility Lenders.

          (g) In the event that the Designee succeeds to the Borrower's interest
     under the Operator's Agreement, whether by foreclosure or otherwise, the
     Designee may elect (but shall not be required to) by written notice of
     assumption delivered to the Consenting Party to assume liability for all of
     the Borrower's obligations under the Operator's Agreement (and the
     Consenting Party shall not be obligated to recognize any such succession
     until it has received such written notice of assumption); provided, however
     that such liability shall not include any liability for claims of the
     Consenting Party against the Borrower arising from the Borrower's failure
     to perform during the period prior to the Offshore Collateral Agent's or
     such Designee's succession to the Borrower's interest in and under the
     Operator's Agreement. Except as otherwise set forth in the immediately
     preceding sentence, the Designee shall not be liable for the performance or
     observance of any of the obligations or duties of the Borrower under the
     Operator's Agreement, nor shall the grant of a security interest in the
     Operator's Agreement by the Borrower to the Offshore Collateral Agent on
     behalf of the Senior Lenders give


                                        5



     rise to any duties or obligations whatsoever on the part of the Offshore
     Collateral Agent owing to the Consenting Party.

          (h) Upon the exercise by the Offshore Collateral Agent on behalf of
     the Senior Lenders of any of the remedies set forth in the Master Security
     Agreement, the Offshore Collateral Agent may, to the extent permitted by
     Article V of the Master Security Agreement, assign its rights and interests
     and the rights and interests of the Borrower under the Operator's Agreement
     to any purchaser or transferee of the Offshore Collateral, if such
     purchaser or transferee shall (i) assume all of the obligations of the
     Borrower under the Operator's Agreement and (ii) be, in the reasonable
     opinion of the Consenting Party, sufficiently creditworthy to perform the
     obligations of the Borrower under the Operator's Agreement. Upon such
     assignment and assumption, the Senior Lenders shall be relieved of all
     obligations under the Operator's Agreement arising after such assignment
     and assumption.

          (i) In the event that the Designee shall assume or be liable for any
     obligation under the Operator's Agreement (as contemplated in clause (g)
     above or otherwise), such liability shall be limited solely to such party's
     interest in the Offshore Collateral (and no officer, director, employee,
     shareholder or agent thereof shall have any liability with respect
     thereto).

     4. Payment Arrangements. The Consenting Party hereby agrees that it shall
make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Operator's Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no.105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.

     5. Miscellaneous.

          (a) This Consent shall be binding upon the Consenting Party, its
     successors and assigns and shall inure, together with the rights and
     remedies of the Offshore Collateral Agent hereunder, to the benefit of the
     Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
     and their respective successors, transferees and assigns.

          (b) This Consent and the obligations of the Consenting Party hereunder
     shall terminate and be of no further force and effect on the date on which
     the Consenting Party receives a notice from the Offshore Collateral Agent
     stating that all of the Borrower's obligations under the Master Security
     Agreement shall have terminated in accordance with the terms thereof.


                                        6



          (c) No amendment, modification or waiver of any provision of this
     Consent shall be effective unless the same shall be in writing and signed
     by the parties hereto and then such waiver shall be effective only in the
     specific instance and for the specific purpose for which it was given.

          (d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
     THE LAWS OF THE STATE OF NEW YORK.

          (e) The Consenting Party hereby irrevocably consents and agrees, for
     the benefit of the Offshore Collateral Agent, that any legal action, suit
     or proceeding against it with respect to its obligations, liabilities or
     any other matter under or arising out of or in connection with this Consent
     may be brought in any Federal or State court located in New York County in
     the City of New York and hereby irrevocably accepts and submits to the
     non-exclusive jurisdiction of such court with respect to any such action,
     suit or proceeding. The Consenting Party hereby waives any objection which
     it may now or hereafter have to the laying of venue of any of the aforesaid
     actions, suits or proceedings, brought in any such court and hereby further
     waives and agrees not to plead or claim in any such court that any such
     action, suit or proceeding brought therein has been brought in an
     inconvenient forum.

          (f) Each party hereto hereby waives, to the fullest extent permitted
     by applicable law, any and all right to trial by jury in any legal
     proceeding arising out of or relating to this Consent or the transactions
     contemplated hereby.

          (g) If any provision of this Consent shall be held to be invalid,
     illegal or unenforceable, the validity, legality and enforceability of the
     remaining provisions in such jurisdiction and the validity, legality and
     enforceability of such provision in any other jurisdiction shall not in any
     way be affected or impaired.

          (h) The headings used in this Consent are for convenience only and
     will not affect the construction or interpretation of any of the terms of
     this Consent.

          (i) This Consent may be executed in any number of counterparts, all of
     which taken together shall constitute one and the same instrument, and any
     of the parties hereto may execute this Consent by signing any such
     counterpart.

          (j) Any notice, request, demand, consent, designation, direction,
     instruction, certificate, report or other communication to be given
     hereunder shall be given in the English language and will be duly given
     when delivered in writing or facsimile transmission (with written
     confirmation of receipt, which confirmation may be by facsimile
     transmission) to a party at its address and


                                        7



     facsimile transmission numbers as indicated below or to such other address
     as may be furnished for this purpose by such party (any such communication
     that is not in writing shall be confirmed in writing), provided that any
     notice, request, demand, consent, designation, direction, instruction,
     certificate, report or other communication sent to the Offshore Collateral
     Agent shall be deemed effective upon actual receipt thereof:

     If to the Offshore Collateral Agent, at

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013
          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

     If to the Consenting Party, at

          Minera Phelps Dodge del Peru S.A.C.
          Av. Camino Real 348
          Torre El Pilar, Oficina 1401
          San Isidro, Lima 27, Peru

                             [SIGNATURES TO FOLLOW]


                                        8



     IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.

                                        MINERA PHELPS DODGE DEL PERU S.A.C.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        CITIBANK, N.A., as Offshore Collateral
                                        Agent


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


Acknowledged and Agreed:

SOCIEDAD MINERA CERRO VERDE S.A.A.


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                        9



                                   Exhibit H-2

              Form of Consent to Assignment - Engineering Agreement



================================================================================

                              CONSENT AND AGREEMENT

                         Dated as of September 30, 2005

                               made by and between

                                FLUOR CANADA LTD.
                               as Consenting Party

                                       and

                                 CITIBANK, N.A.,

                          as Offshore Collateral Agent

================================================================================



     This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and between FLUOR CANADA LTD., a Canadian corporation(the
"Consenting Party") and CITIBANK, N.A., in its capacity as Offshore Collateral
Agent under the Master Security Agreement (the "Offshore Collateral Agent").

                                   WITNESSETH

     WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;

     WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Engineering Agreement No. CV 12913, dated as of December 14, 2004 (the
"Engineering Agreement"), between the Borrower and the Consenting Party to the
Offshore Collateral Agent for the benefit and on behalf of the Senior Lenders;
and

     WHEREAS, as a further condition to the Senior Lenders extending Senior
Loans to the Borrower, the Borrower shall deliver a consent to such collateral
assignment from the counterparty to the Engineering Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Consenting Party and the
Offshore Collateral Agent agree as follows:

     1. Definitions and Interpretation.

          (a) Each capitalized term used herein shall have the meaning assigned
     to such term in Annex A hereto.



          (b) Interpretation. In this Consent, except to the extent that the
     context otherwise requires:

               (i) Section headings are for convenience of reference only and
          shall not affect the interpretation of this Consent;

               (ii) unless otherwise specified, references to Sections, clauses
          and Annexes are references to Sections and clauses of this Consent;

               (iii) references to any document or agreement, including this
          Consent, shall be deemed to include references to such document or
          agreement as amended, supplemented or replaced and in effect from time
          to time in accordance with its terms and subject to compliance with
          the requirements set forth herein and therein;

               (iv) references to any party to this Consent or any other
          document or agreement or to any other person shall include its
          successors and permitted assigns;

               (v) when used in this Consent, the words "including", "includes"
          and "include" shall be deemed to be followed in each instance by the
          words "without limitation";

               (vi) when used in this Consent, the words "herein", "hereby",
          "hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter",
          and words of similar import, shall refer to this Consent in its
          entirety and not to any particular section, subsection, paragraph,
          sub-paragraph, clause or other subdivision, exhibit, schedule or
          appendix of this Consent; and

               (vii) when used herein, the singular shall include the plural,
          the plural shall include the singular and the use of any gender shall
          include all genders, unless the context requires otherwise.

     2. Representations and Warranties. The Consenting Party hereby represents
and warrants that:

          (a) It is an entity duly organized, validly existing and is in good
     standing under the laws of the place in which it is organized.

          (b) It has full power and authority to execute and deliver this
     Consent and to perform its obligations hereunder in accordance with the
     terms provided herein and will not require any additional consent or
     approval of its board of director, any of its shareholders or any other
     Person which it has not already obtained.


                                        2



          (c) This Consent has been duly authorized, executed and delivered by
     it and constitutes a valid and legally binding agreement, enforceable in
     accordance with its terms, subject to bankruptcy, insolvency, fraudulent
     conveyance, reorganization, moratorium and similar laws of general
     applicability relating to or affecting creditors' rights and to general
     equity principles.

          (d) All Governmental Approvals and other third party approvals which
     are necessary for (i) the execution and delivery by it of this Consent,
     (ii) the performance of its obligations hereunder and (iii) the exercise by
     the Offshore Collateral Agent of the rights and remedies with respect to
     the Engineering Agreement (other than Governmental Approvals, if any,
     required to transfer the Engineering Agreement to the Offshore Collateral
     Agent or its assignees) have been obtained and are in full force and
     effect.

          (e) There is no provision of law, statute, regulation, rule, order,
     injunction, decree, writ or judgment, no provision of its organizational
     documents and no provision of any mortgage, indenture, contract or
     agreement binding on it or affecting its properties, which would prohibit,
     conflict with or in any way prevent its execution, delivery, or performance
     of the terms of this Consent.

          (f) There is no action, suit, proceeding or investigation, at law or
     in equity, or before any Governmental Authority or other Person, pending
     or, to the best knowledge of the Consenting Party, threatened, against or
     affecting it or its assets that (i) questions the validity of this Consent
     or any action taken or to be taken pursuant hereto or thereto, or (ii) in
     any case or in the aggregate would reasonably be expected to result in a
     material adverse effect on the ability of the Consenting Party to perform
     its obligations hereunder.

          (g) The Consenting Party is not in default under any material covenant
     or obligation under the Engineering Agreement and no such default has
     occurred prior to the date hereof. To the best knowledge of the Consenting
     Party, the Borrower is not in default under any material covenant or
     obligation under the Engineering Agreement and no such default has occurred
     prior to the date hereof. The Consenting Party and, to the best of its
     knowledge, the Borrower, have complied with all conditions precedent to the
     respective obligations of such party to perform under the Engineering
     Agreement. The Engineering Agreement, as of the date hereof, is in full
     force and effect, has not been amended, and none of the Borrower's rights
     under the Engineering Agreement have been waived.

     3. Consent and Agreement. The Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Engineering Agreement:

          (a) Pursuant to the Master Security Agreement, the Borrower has
     granted, transferred and assigned to the Offshore Collateral Agent, as
     collateral


                                        3



     agent for the benefit of Senior Lenders named in the Master Security
     Agreement, all right, title and interest which Borrower now has or which
     shall hereafter arise in and to the Engineering Agreement and all claims
     resulting from any failure of performance or compliance with any of the
     provisions of the Engineering Agreement, together with full power and
     authority, in its own name or in the name of Borrower or otherwise, to
     enforce and request payment under the Engineering Agreement and to collect,
     receive and give receipts and releases for such amounts.

          (b) The Consenting Party hereby irrevocably consents to and accepts
     the grant, transfer and assignment by the Borrower to the Offshore
     Collateral Agent for the benefit of and on behalf of the Senior Lenders of
     all of Borrower's right, title and interest in the Engineering Agreement
     and all claims resulting from any failure of performance or compliance with
     any of the provisions of the Engineering Agreement, together with full
     power and authority, in the name of the Borrower, to enforce the
     Engineering Agreement against the Consenting Party, it being understood and
     agreed that any enforcement by the Offshore Collateral Agent shall not
     require any further consent from the Consenting Party or constitute a
     default under the Engineering Agreement. The Consenting Party hereby
     irrevocably further agrees for the benefit of the Offshore Collateral Agent
     and the Senior Lenders in case of a default under the Engineering Agreement
     by the Borrower, to accept performance by a Person designated by the
     Offshore Collateral Agent (or one or more of its representatives or
     assignees (the "Designee"), as instructed by the Administrative Agent) and
     neither the Offshore Collateral Agent nor its Designee shall be subject to
     any defense arising from the Borrower's failure to perform, provided that
     the Designee's performance shall in all other respects be in accordance
     with the provisions of the Engineering Agreement.

          (c) The Consenting Party shall deliver to the Offshore Collateral
     Agent at the address specified in Section 5(j), or at such other address as
     the Offshore Collateral Agent may designate in writing from time to time to
     the Consenting Party, concurrently with delivery thereof to the Borrower, a
     copy of any material notice, request, demand or other document given by the
     Consenting Party in connection with the Engineering Agreement, along with
     notice of any material breach, termination or claim of termination under
     the Engineering Agreement for which notice to the Borrower is required
     under the Engineering Agreement.

          (d) In the event that the Designee succeeds to the Borrower's interest
     under the Engineering Agreement, whether by foreclosure or otherwise, the
     Designee may elect (but shall not be required to) by written notice of
     assumption delivered to the Consenting Party to assume liability for all of
     the Borrower's


                                        4



     obligations under the Engineering Agreement (and the Consenting Party shall
     not be obligated to recognize any such succession until it has received
     such written notice of assumption); provided, however that such liability
     shall not include any liability for claims of the Consenting Party against
     the Borrower arising from the Borrower's failure to perform during the
     period prior to the Offshore Collateral Agent's or such Designee's
     succession to the Borrower's interest in and under the Engineering
     Agreement. Except as otherwise set forth in the immediately preceding
     sentence, the Designee shall not be liable for the performance or
     observance of any of the obligations or duties of the Borrower under the
     Engineering Agreement, nor shall the grant of a security interest in the
     Engineering Agreement by the Borrower to the Offshore Collateral Agent on
     behalf of the Senior Lenders give rise to any duties or obligations
     whatsoever on the part of the Offshore Collateral Agent owing to the
     Consenting Party.

          (e) Upon the exercise by the Offshore Collateral Agent on behalf of
     the Senior Lenders of any of the remedies set forth in the Master Security
     Agreement, the Offshore Collateral Agent may, to the extent permitted by
     Article V of the Master Security Agreement, assign its rights and interests
     and the rights and interests of the Borrower under the Engineering
     Agreement to any purchaser or transferee of the Offshore Collateral, if
     such purchaser or transferee shall (i) assume all of the obligations of the
     Borrower under the Engineering Agreement and (ii) be, in the reasonable
     opinion of the Consenting Party, sufficiently creditworthy to perform the
     obligations of the Borrower under the Engineering Agreement. Upon such
     assignment and assumption, the Senior Lenders shall be relieved of all
     obligations under the Engineering Agreement arising after such assignment
     and assumption.

          (f) In the event that the Designee shall assume or be liable for any
     obligation under the Engineering Agreement (as contemplated in clause (d)
     above or otherwise), such liability shall be limited solely to such party's
     interest in the Offshore Collateral (and no officer, director, employee,
     shareholder or agent thereof shall have any liability with respect
     thereto).

          (g) In no event shall any grant, transfer, assignment or acceptance of
     performance pursuant to this Section 3 change, modify or increase
     Borrower's obligations to the Consenting Party or the Consenting Party's
     obligations to the Borrower under the Engineering Agreement and any related
     agreement.

     4. Payment Arrangements. The Consenting Party hereby agrees that it shall
make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Engineering Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no.105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.


                                        5



     5. Miscellaneous.

          (a) This Consent shall be binding upon the Consenting Party, its
     successors and assigns and shall inure, together with the rights and
     remedies of the Offshore Collateral Agent hereunder, to the benefit of the
     Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
     and their respective successors, transferees and assigns.

          (b) This Consent and the obligations of the Consenting Party hereunder
     shall terminate and be of no further force and effect on the date on which
     the Consenting Party receives a notice from the Offshore Collateral Agent
     stating that all of the Borrower's obligations under the Master Security
     Agreement shall have terminated in accordance with the terms thereof.

          (c) No amendment, modification or waiver of any provision of this
     Consent shall be effective unless the same shall be in writing and signed
     by the parties hereto and then such waiver shall be effective only in the
     specific instance and for the specific purpose for which it was given.

          (d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
     THE LAW OF THE STATE OF NEW YORK.

          (e) The Consenting Party hereby irrevocably consents and agrees, for
     the benefit of the Offshore Collateral Agent, that any legal action, suit
     or proceeding against it with respect to its obligations, liabilities or
     any other matter under or arising out of or in connection with this Consent
     may be brought in any Federal or State court located in New York County in
     the City of New York and hereby irrevocably accepts and submits to the
     non-exclusive jurisdiction of such court with respect to any such action,
     suit or proceeding. The Consenting Party hereby waives any objection which
     it may now or hereafter have to the laying of venue of any of the aforesaid
     actions, suits or proceedings, brought in any such court and hereby further
     waives and agrees not to plead or claim in any such court that any such
     action, suit or proceeding brought therein has been brought in an
     inconvenient forum.

          (f) Each party hereto hereby waives, to the fullest extent permitted
     by applicable law, any and all right to trial by jury in any legal
     proceeding arising out of or relating to this Consent or the transactions
     contemplated hereby.

          (g) If any provision of this Consent shall be held to be invalid,
     illegal or unenforceable, the validity, legality and enforceability of the
     remaining provisions in such jurisdiction and the validity, legality and
     enforceability of such provision in any other jurisdiction shall not in any
     way be affected or impaired.


                                        6



          (h) The headings used in this Consent are for convenience only and
     will not affect the construction or interpretation of any of the terms of
     this Consent.

          (i) This Consent may be executed in any number of counterparts, all of
     which taken together shall constitute one and the same instrument, and any
     of the parties hereto may execute this Consent by signing any such
     counterpart.

          (j) Any notice, request, demand, consent, designation, direction,
     instruction, certificate, report or other communication to be given
     hereunder shall be given in the English language and will be duly given
     when delivered in writing or facsimile transmission (with written
     confirmation of receipt, which confirmation may be by facsimile
     transmission) to a party at its address and facsimile transmission numbers
     as indicated below or to such other address as may be furnished for this
     purpose by such party (any such communication that is not in writing shall
     be confirmed in writing), provided that any notice, request, demand,
     consent, designation, direction, instruction, certificate, report or other
     communication sent to the Offshore Collateral Agent shall be deemed
     effective upon actual receipt thereof:

     If to the Offshore Collateral Agent, at

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013

          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

     If to the Consenting Party, at
     Vasse Navaratnam
     1075 West Georgia Street, Suite 700
     Vancouver, British Columbia V6E 4M7
     Canada

                             [SIGNATURES TO FOLLOW]


                                        7



     IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.

                                        FLUOR CANADA LTD.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        CITIBANK, N.A., as Offshore Collateral
                                        Agent


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


Acknowledged and Agreed:

SOCIEDAD MINERA CERRO VERDE S.A.A.


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                        8

                                                                         ANNEX A

     "Administrative Agent": Calyon.

     "Borrower": Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta
listed on the Lima Stock Exchange and organized under the laws of Peru.

     "BVN": Compania de Minas Buenaventure S.A.A., a sociedad anonima abierta
organized under the laws of the Republic of Peru.

     "Calyon": Calyon New York Branch, a licensed branch of a banking
corporation organized and existing under the laws of the French Republic.

     "Completion Guarantee": the Completion Guarantee, dated as of the date
hereof, among the Parent Companies, the Borrower, the Senior Facility Lenders
and the Administrative Agent.

     "Consent": the meaning given in the first paragraph hereto.

     "Consenting Party": the meaning given in the first paragraph hereto.

     "Designee": the meaning given in Section 3(b) hereof.

     "Engineering Agreement" the meaning given in the Recitals hereto.

     "Financing Documents": the Senior Lenders Financing Documents and the
Senior Facility Lenders Financing Documents.

     "Governmental Approval": any authorization, consent, approval, license,
ruling, permit, concession, certification, exemption, filing (other than with
respect to the perfection of any security interest), variance, order, judgment,
decree, publication, notice to, declaration of or with or registration by or
with any Governmental Authority.

     "JBIC": Japan Bank for International Cooperation, a Japanese government
financial institution organized under the laws of Japan.

     "KfW": a public corporation formed under the laws of the Federal Republic
of Germany.

     "Master Participation Agreement" or "MPA": the Master Participation
Agreement, dated as of September 30, 2005, among the Borrower, JBIC, Sumitomo
Mitsui Banking Corporation, the Bank of Tokyo-Mitsubishi Ltd., KfW, Calyon New
York Branch, RBS, Scotia Capital and Mizuho.


                                        9



     "Master Security Agreement" or "MSA": the Master Security Agreement, dated
as of September 30, 2005, among the MSA Parties.

     "Mizuho": Mizuho Corporate Bank, Ltd., a banking institution organized
under the laws of Japan.

     "MSA Parties": the Borrower, JBIC, Sumitomo Mitsui Banking Corporation, the
Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon, RBS, Scotia Capital, Mizuho and
Citibank, N.A.

     "Offshore Collateral Agent": the meaning given in the first paragraph
hereto.

     "Offshore Security Documents": the Master Security Agreement, and each
other agreement or document, filings, notices, arrangements or the like which
are required to establish and maintain the security interest in the Offshore
Collateral for the benefit of the Secured Parties.

     "Onshore Security Documents": each of the following documents governed by
Peruvian law: (i) the mining mortgages (hipoteca minera), the civil mortgages
(hipoteca), the mining pledge (prenda minera (equipment, machinery and movable
assets), the floating mining pledge (prenda minera flotante (minerals and
Cathode and Concentrate in inventory), each granted pursuant to Section 3.01 of
the MSA, (ii) the conditional assignments of rights (cesion condicionada de
derechos) granted pursuant to Section 3.02(a)(ii) of the MSA, (iii) the Contrato
de Cuenta Escrow for Onshore Accounts executed pursuant to Section 3.05(b) of
the MSA, (iv) the pledge (prenda) for the SMCV Shares pursuant to Section 3.07
of the MSA, and (v) any other agreement or document, filings, notices,
arrangements or the like which are required to establish and maintain the
security interest in the Onshore Collateral for the benefit of the Senior
Lenders.

     "Parent Companies": collectively, PDC, SMM, SC and BVN.

     "PDC": Phelps Dodge Corporation, a New York corporation.

     "Person": any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government agency or political subdivision thereof.

     "RBS": The Royal Bank of Scotland plc, a public limited company
incorporated under the laws of Scotland.

     "SC": Sumitomo Corporation, a Japanese corporation.

     "Scotia Capital": The Bank of Nova Scotia, a Canadian chartered bank,
organized under the laws of Canada.


                                       10



     "Security Documents": the Onshore Security Documents and the Offshore
Security Documents.

     "Senior Facility Lenders": JBIC, KfW, Calyon, RBS, Scotia Capital, Mizuho
and their respective assignees.

     "Senior Facility Lenders Financing Documents": the Master Participation
Agreement, each Senior Facility Loan Agreement, each Promissory Note, and the
Transfer Restrictions Agreement.

     "Senior Facility Loans": loans provided by the Senior Facility Lenders as
set forth in the MPA, together with any Replacement Debt.

     "Senior Lenders": prior to an issuance of Peruvian Bonds, each Senior
Facility Lender and after an issuance of Peruvian Bonds, collectively, each
Senior Facility Lender and, collectively, the Peruvian Bondholders, it being
understood that the Peruvian Bondholders shall collectively count as only one
Senior Lender.

     "Senior Lenders Financing Documents": the Completion Guarantee and each
Security Document.

     "Senior Loans": prior to an issuance of Peruvian Bonds, the Senior Facility
Loans and, after an issuance of Peruvian Bonds, collectively, the Senior
Facility Loans and the Peruvian Bonds.

     "SMM": Sumitomo Metal Mining Co., Ltd., a Japanese corporation.


                                       11



================================================================================

                              CONSENT AND AGREEMENT

                         Dated as of September 30, 2005

                               made by and between

                         FLUOR DANIEL SUCURSAL DEL PERU
                               as Consenting Party

                                       and

                                 CITIBANK, N.A.,

                          as Offshore Collateral Agent

================================================================================



     This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and between FLUOR DANIEL SUCURSAL DEL PERU, with its
principal place of business at Av. Las Camelias 790, Ofi 702-B, San Isidro,
Lima, Peru (the "Consenting Party") and CITIBANK, N.A., in its capacity as
Offshore Collateral Agent under the Master Security Agreement (the "Offshore
Collateral Agent").

                                   WITNESSETH

     WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;

     WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Construction Agreement No. CV 12915, dated as of December 14, 2004 (the
"Construction Agreement"), between the Borrower and the Consenting Party to the
Offshore Collateral Agent for the benefit and on behalf of the Senior Lenders;
and

     WHEREAS, as a further condition to the Senior Lenders extending Senior
Loans to the Borrower, the Borrower shall deliver a consent to such collateral
assignment from the counterparty to the Construction Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Consenting Party and the
Offshore Collateral Agent agree as follows:

     1. Definitions and Interpretation.

          (a) Each capitalized term used herein shall have the meaning assigned
     to such term in Annex A hereto.

          (b) Interpretation. In this Consent, except to the extent that the
     context otherwise requires:

               (i) Section headings are for convenience of reference only and
          shall not affect the interpretation of this Consent;

               (ii) unless otherwise specified, references to Sections, clauses
          and Annexes are references to Sections and clauses of this Consent;

               (iii) references to any document or agreement, including this
          Consent, shall be deemed to include references to such document or
          agreement as amended, supplemented or replaced and in effect from time




          to time in accordance with its terms and subject to compliance with
          the requirements set forth herein and therein;

               (iv) references to any party to this Consent or any other
          document or agreement or to any other person shall include its
          successors and permitted assigns;

               (v) when used in this Consent, the words "including", "includes"
          and "include" shall be deemed to be followed in each instance by the
          words "without limitation";

               (vi) when used in this Consent, the words "herein", "hereby",
          "hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter",
          and words of similar import, shall refer to this Consent in its
          entirety and not to any particular section, subsection, paragraph,
          sub-paragraph, clause or other subdivision, exhibit, schedule or
          appendix of this Consent; and

               (vii) when used herein, the singular shall include the plural,
          the plural shall include the singular and the use of any gender shall
          include all genders, unless the context requires otherwise.

     2. Representations and Warranties. The Consenting Party hereby represents
and warrants that:

          (a) It is an entity duly organized, validly existing and is in good
     standing under the laws of the place in which it is organized.

          (b) It has full power and authority to execute and deliver this
     Consent and to perform its obligations hereunder in accordance with the
     terms provided herein and will not require any additional consent or
     approval of its board of director, any of its shareholders or any other
     Person which it has not already obtained.

          (c) This Consent has been duly authorized, executed and delivered by
     it and constitutes a valid and legally binding agreement, enforceable in
     accordance with its terms, subject to bankruptcy, insolvency, fraudulent
     conveyance, reorganization, moratorium and similar laws of general
     applicability relating to or affecting creditors' rights and to general
     equity principles.

          (d) All Governmental Approvals and other third party approvals which
     are necessary for (i) the execution and delivery by it of this Consent,
     (ii) the performance of its obligations hereunder and (iii) the exercise by
     the Offshore Collateral Agent of the rights and remedies with respect to
     the Construction Agreement (other than Governmental Approvals, if any,
     required to transfer the


                                        2



     Construction Agreement to the Offshore Collateral Agent or its assignees)
     have been obtained and are in full force and effect.

          (e) There is no provision of law, statute, regulation, rule, order,
     injunction, decree, writ or judgment, no provision of its organizational
     documents and no provision of any mortgage, indenture, contract or
     agreement binding on it or affecting its properties, which would prohibit,
     conflict with or in any way prevent its execution, delivery, or performance
     of the terms of this Consent.

          (f) There is no action, suit, proceeding or investigation, at law or
     in equity, or before any Governmental Authority or other Person, pending
     or, to the best knowledge of the Consenting Party, threatened, against or
     affecting it or its assets that (i) questions the validity of this Consent
     or any action taken or to be taken pursuant hereto or thereto, or (ii) in
     any case or in the aggregate would reasonably be expected to result in a
     material adverse effect on the ability of the Consenting Party to perform
     its obligations hereunder.

          (g) The Consenting Party is not in default under any material covenant
     or obligation under the Construction Agreement and no such default has
     occurred prior to the date hereof. To the best knowledge of the Consenting
     Party, the Borrower is not in default under any material covenant or
     obligation under the Construction Agreement and no such default has
     occurred prior to the date hereof. The Consenting Party and, to the best of
     its knowledge, the Borrower, have complied with all conditions precedent to
     the respective obligations of such party to perform under the Construction
     Agreement. The Construction Agreement, as of the date hereof, is in full
     force and effect, has not been amended, and none of the Borrower's rights
     under the Construction Agreement have been waived.

     3. Consent and Agreement. The Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Construction Agreement:

          (a) Pursuant to the Master Security Agreement, the Borrower has
     granted, transferred and assigned to the Offshore Collateral Agent, as
     collateral agent for the benefit of Senior Lenders named in the Master
     Security Agreement, all right, title and interest which Borrower now has or
     which shall hereafter arise in and to the Construction Agreement and all
     claims resulting from any failure of performance or compliance with any of
     the provisions of the Construction Agreement, together with full power and
     authority, in its own name or in the name of Borrower or otherwise, to
     enforce and request payment under the Construction Agreement and to
     collect, receive and give receipts and releases for such amounts.

          (b) The Consenting Party hereby irrevocably consents to and accepts
     the grant, transfer and assignment by the Borrower to the Offshore
     Collateral


                                        3



     Agent for the benefit of and on behalf of the Senior Lenders of all of
     Borrower's right, title and interest in the Construction Agreement and all
     claims resulting from any failure of performance or compliance with any of
     the provisions of the Construction Agreement, together with full power and
     authority, in the name of the Borrower, to enforce the Construction
     Agreement against the Consenting Party, it being understood and agreed that
     any enforcement by the Offshore Collateral Agent shall not require any
     further consent from the Consenting Party or constitute a default under the
     Construction Agreement. The Consenting Party hereby irrevocably further
     agrees for the benefit of the Offshore Collateral Agent and the Senior
     Lenders in case of a default under the Construction Agreement by the
     Borrower, to accept performance by a Person designated by the Offshore
     Collateral Agent (or one or more of its representatives or assignees (the
     "Designee"), as instructed by the Administrative Agent) and neither the
     Offshore Collateral Agent nor its Designee shall be subject to any defense
     arising from the Borrower's failure to perform, provided that the
     Designee's performance shall in all other respects be in accordance with
     the provisions of the Construction Agreement.

          (c) The Consenting Party shall deliver to the Offshore Collateral
     Agent at the address specified in Section 5(j), or at such other address as
     the Offshore Collateral Agent may designate in writing from time to time to
     the Consenting Party, concurrently with delivery thereof to the Borrower, a
     copy of any material notice, request, demand or other document given by the
     Consenting Party in connection with the Construction Agreement, along with
     notice of any material breach, termination or claim of termination under
     the Construction Agreement for which notice to the Borrower is required
     under the Construction Agreement.

          (d) In the event that the Designee succeeds to the Borrower's interest
     under the Construction Agreement, whether by foreclosure or otherwise, the
     Designee may elect (but shall not be required to) by written notice of
     assumption delivered to the Consenting Party to assume liability for all of
     the Borrower's obligations under the Construction Agreement (and the
     Consenting Party shall not be obligated to recognize any such succession
     until it has received such written notice of assumption); provided, however
     that such liability shall not include any liability for claims of the
     Consenting Party against the Borrower arising from the Borrower's failure
     to perform during the period prior to the Offshore Collateral Agent's or
     such Designee's succession to the Borrower's interest in and under the
     Construction Agreement. Except as otherwise set forth in the immediately
     preceding sentence, the Designee shall not be liable for the performance or
     observance of any of the obligations or duties of the Borrower under the
     Construction Agreement, nor shall the grant of a security interest in the
     Construction Agreement by the Borrower to the Offshore Collateral Agent on


                                        4



     behalf of the Senior Lenders give rise to any duties or obligations
     whatsoever on the part of the Offshore Collateral Agent owing to the
     Consenting Party.

          (e) Upon the exercise by the Offshore Collateral Agent on behalf of
     the Senior Lenders of any of the remedies set forth in the Master Security
     Agreement, the Offshore Collateral Agent may, to the extent permitted by
     Article V of the Master Security Agreement, assign its rights and interests
     and the rights and interests of the Borrower under the Construction
     Agreement to any purchaser or transferee of the Offshore Collateral, if
     such purchaser or transferee shall (i) assume all of the obligations of the
     Borrower under the Construction Agreement and (ii) be, in the reasonable
     opinion of the Consenting Party, sufficiently creditworthy to perform the
     obligations of the Borrower under the Construction Agreement. Upon such
     assignment and assumption, the Senior Lenders shall be relieved of all
     obligations under the Construction Agreement arising after such assignment
     and assumption.

          (f) In the event that the Designee shall assume or be liable for any
     obligation under the Construction Agreement (as contemplated in clause (d)
     above or otherwise), such liability shall be limited solely to such party's
     interest in the Offshore Collateral (and no officer, director, employee,
     shareholder or agent thereof shall have any liability with respect
     thereto).

          (g) In no event shall any grant, transfer, assignment or acceptance of
     performance pursuant to this Section 3 change, modify or increase
     Borrower's obligations to the Consenting Party or the Consenting Party's
     obligations to the Borrower under the Construction Agreement and any
     related agreement.

     4. Payment Arrangements. The Consenting Party hereby agrees that it shall
make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Construction Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no.105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.

     5. Miscellaneous.

          (a) This Consent shall be binding upon the Consenting Party, its
     successors and assigns and shall inure, together with the rights and
     remedies of the Offshore Collateral Agent hereunder, to the benefit of the
     Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
     and their respective successors, transferees and assigns.

          (b) This Consent and the obligations of the Consenting Party hereunder
     shall terminate and be of no further force and effect on the date on


                                        5



     which the Consenting Party receives a notice from the Offshore Collateral
     Agent stating that all of the Borrower's obligations under the Master
     Security Agreement shall have terminated in accordance with the terms
     thereof.

          (c) No amendment, modification or waiver of any provision of this
     Consent shall be effective unless the same shall be in writing and signed
     by the parties hereto and then such waiver shall be effective only in the
     specific instance and for the specific purpose for which it was given.

          (d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
     THE LAW OF THE STATE OF NEW YORK.

          (e) The Consenting Party hereby irrevocably consents and agrees, for
     the benefit of the Offshore Collateral Agent, that any legal action, suit
     or proceeding against it with respect to its obligations, liabilities or
     any other matter under or arising out of or in connection with this Consent
     may be brought in any Federal or State court located in New York County in
     the City of New York and hereby irrevocably accepts and submits to the
     non-exclusive jurisdiction of such court with respect to any such action,
     suit or proceeding. The Consenting Party hereby waives any objection which
     it may now or hereafter have to the laying of venue of any of the aforesaid
     actions, suits or proceedings, brought in any such court and hereby further
     waives and agrees not to plead or claim in any such court that any such
     action, suit or proceeding brought therein has been brought in an
     inconvenient forum.

          (f) Each party hereto hereby waives, to the fullest extent permitted
     by applicable law, any and all right to trial by jury in any legal
     proceeding arising out of or relating to this Consent or the transactions
     contemplated hereby.

          (g) If any provision of this Consent shall be held to be invalid,
     illegal or unenforceable, the validity, legality and enforceability of the
     remaining provisions in such jurisdiction and the validity, legality and
     enforceability of such provision in any other jurisdiction shall not in any
     way be affected or impaired.

          (h) The headings used in this Consent are for convenience only and
     will not affect the construction or interpretation of any of the terms of
     this Consent.

          (i) This Consent may be executed in any number of counterparts, all of
     which taken together shall constitute one and the same instrument, and any
     of the parties hereto may execute this Consent by signing any such
     counterpart.


                                        6



          (j) Any notice, request, demand, consent, designation, direction,
     instruction, certificate, report or other communication to be given
     hereunder shall be given in the English language and will be duly given
     when delivered in writing or facsimile transmission (with written
     confirmation of receipt, which confirmation may be by facsimile
     transmission) to a party at its address and facsimile transmission numbers
     as indicated below or to such other address as may be furnished for this
     purpose by such party (any such communication that is not in writing shall
     be confirmed in writing), provided that any notice, request, demand,
     consent, designation, direction, instruction, certificate, report or other
     communication sent to the Offshore Collateral Agent shall be deemed
     effective upon actual receipt thereof:

     If to the Offshore Collateral Agent, at

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013

          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

     If to the Consenting Party, at
     Morris Wolf
     Av. Las Camelias 790, Ofi 702-B
     San Isidro
     Lima, Peru

                             [SIGNATURES TO FOLLOW]


                                       7



     IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.

                                        FLUOR DANIEL SUCURSAL DEL PERU


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        CITIBANK, N.A., as Offshore Collateral
                                        Agent


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


Acknowledged and Agreed:

SOCIEDAD MINERA CERRO VERDE S.A.A.


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       8



                                                                         ANNEX A

     "Administrative Agent": Calyon.

     "Borrower": Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta
listed on the Lima Stock Exchange and organized under the laws of Peru.

     "BVN": Compania de Minas Buenaventure S.A.A., a sociedad anonima abierta
organized under the laws of the Republic of Peru.

     "Calyon": Calyon New York Branch, a licensed branch of a banking
corporation organized and existing under the laws of the French Republic.

     "Completion Guarantee": the Completion Guarantee, dated as of the date
hereof, among the Parent Companies, the Borrower, the Senior Facility Lenders
and the Administrative Agent.

     "Consent": the meaning given in the first paragraph hereto.

     "Consenting Party": the meaning given in the first paragraph hereto.

     "Designee": the meaning given in Section 3(b) hereof.

     "Construction Agreement" the meaning given in the Recitals hereto.

     "Financing Documents": the Senior Lenders Financing Documents and the
Senior Facility Lenders Financing Documents.

     "Governmental Approval": any authorization, consent, approval, license,
ruling, permit, concession, certification, exemption, filing (other than with
respect to the perfection of any security interest), variance, order, judgment,
decree, publication, notice to, declaration of or with or registration by or
with any Governmental Authority.

     "JBIC": Japan Bank for International Cooperation, a Japanese government
financial institution organized under the laws of Japan.

     "KfW": a public corporation formed under the laws of the Federal Republic
of Germany.

     "Master Participation Agreement" or "MPA": the Master Participation
Agreement, dated as of September 30, 2005, among the Borrower, JBIC, Sumitomo
Mitsui Banking Corporation, the Bank of Tokyo-Mitsubishi Ltd., KfW, Calyon New
York Branch, RBS, Scotia Capital and Mizuho.


                                       9



     "Master Security Agreement" or "MSA": the Master Security Agreement, dated
as of September 30, 2005, among the MSA Parties.

     "Mizuho": Mizuho Corporate Bank, Ltd., a banking institution organized
under the laws of Japan.

     "MSA Parties": the Borrower, JBIC, Sumitomo Mitsui Banking Corporation, the
Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon, RBS, Scotia Capital, Mizuho and
Citibank, N.A.

     "Offshore Collateral Agent": the meaning given in the first paragraph
hereto.

     "Offshore Security Documents": the Master Security Agreement, and each
other agreement or document, filings, notices, arrangements or the like which
are required to establish and maintain the security interest in the Offshore
Collateral for the benefit of the Secured Parties.

     "Onshore Security Documents": each of the following documents governed by
Peruvian law: (i) the mining mortgages (hipoteca minera), the civil mortgages
(hipoteca), the mining pledge (prenda minera (equipment, machinery and movable
assets), the floating mining pledge (prenda minera flotante (minerals and
Cathode and Concentrate in inventory), each granted pursuant to Section 3.01 of
the MSA, (ii) the conditional assignments of rights (cesion condicionada de
derechos) granted pursuant to Section 3.02(a)(ii) of the MSA, (iii) the Contrato
de Cuenta Escrow for Onshore Accounts executed pursuant to Section 3.05(b) of
the MSA, (iv) the pledge (prenda) for the SMCV Shares pursuant to Section 3.07
of the MSA, and (v) any other agreement or document, filings, notices,
arrangements or the like which are required to establish and maintain the
security interest in the Onshore Collateral for the benefit of the Senior
Lenders.

     "Parent Companies": collectively, PDC, SMM, SC and BVN.

     "PDC": Phelps Dodge Corporation, a New York corporation.

     "Person": any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government agency or political subdivision thereof.

     "RBS": The Royal Bank of Scotland plc, a public limited company
incorporated under the laws of Scotland.

     "SC": Sumitomo Corporation, a Japanese corporation.

     "Scotia Capital": The Bank of Nova Scotia, a Canadian chartered bank,
organized under the laws of Canada.


                                       10



     "Security Documents": the Onshore Security Documents and the Offshore
Security Documents.

     "Senior Facility Lenders": JBIC, KfW, Calyon, RBS, Scotia Capital, Mizuho
and their respective assignees.

     "Senior Facility Lenders Financing Documents": the Master Participation
Agreement, each Senior Facility Loan Agreement, each Promissory Note, and the
Transfer Restrictions Agreement.

     "Senior Facility Loans": loans provided by the Senior Facility Lenders as
set forth in the MPA, together with any Replacement Debt.

     "Senior Lenders": prior to an issuance of Peruvian Bonds, each Senior
Facility Lender and after an issuance of Peruvian Bonds, collectively, each
Senior Facility Lender and, collectively, the Peruvian Bondholders, it being
understood that the Peruvian Bondholders shall collectively count as only one
Senior Lender.

     "Senior Lenders Financing Documents": the Completion Guarantee and each
Security Document.

     "Senior Loans": prior to an issuance of Peruvian Bonds, the Senior Facility
Loans and, after an issuance of Peruvian Bonds, collectively, the Senior
Facility Loans and the Peruvian Bonds.

     "SMM": Sumitomo Metal Mining Co., Ltd., a Japanese corporation.


                                       11



                                   Exhibit H-3

             Form of Consent to Assignment - Shareholders Agreement



================================================================================

                              CONSENT AND AGREEMENT

                         Dated as of September 30, 2005

                                made by and among

                        SMM CERRO VERDE NETHERLANDS B.V.
                              (a Dutch corporation)

                         SUMITOMO METAL MINING CO., LTD.
                            (a Japanese corporation)

                              SUMITOMO CORPORATION
                            (a Japanese corporation)

                        SUMMIT GLOBAL MANAGEMENT II B.V.
                              (a Dutch corporation)

                      COMPANIA DE MINAS BUENAVENTURA S.A.A.
                      (a Peruvian sociedad anonima abierta)

                          CYPRUS CLIMAX METALS COMPANY
                            (a Delaware corporation)

                            PHELPS DODGE CORPORATION
                            (a New York corporation)

                                       and

                  CITIBANK, N.A., as Offshore Collateral Agent

================================================================================



     This CONSENT AND AGREEMENT, dated as of September 30, 2005 (this
"Consent"), made by and among SMM CERRO VERDE NETHERLANDS B.V., a Dutch
corporation (the "Sumitomo Participant"), SUMITOMO METAL MINING CO., LTD., a
Japanese corporation ("SMM"), SUMITOMO CORPORATION, a Japanese corporation
("SC"), SUMMIT GLOBAL MANAGEMENT II B.V., formerly known as Summit Global
Management B.V., a Dutch corporation ("SGM"), CYPRUS CLIMAX METALS COMPANY, a
Delaware corporation (the "PD Participant"), PHELPS DODGE CORPORATION, a New
York corporation ("PDC"), COMPANIA DE MINAS BUENAVENTURA S.A.A., a Peruvian
sociedad anonima abierta ("BVN", and, together with the Sumitomo Participant,
SMM, SC, SGM, the PD Participant, and PDC, the "Consenting Parties" and each a
"Consenting Party") and CITIBANK, N.A., in its capacity as Offshore Collateral
Agent under the Master Security Agreement (the "Offshore Collateral Agent").

                                   WITNESSETH

WHEREAS, the Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;

WHEREAS, as a condition to the Senior Lenders extending Senior Loans to the
Borrower, the Borrower has collaterally assigned its right, title and interest
in the Shareholders Agreement to the Offshore Collateral Agent for the benefit
and on behalf of the Senior Lenders; and

WHEREAS, as a further condition to the Senior Lenders extending Senior Loans to
the Borrower, the Borrower shall deliver a consent to such collateral assignment
from the counterparties to the Shareholders Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Consenting Parties and the Offshore
Collateral Agent agree as follows:

     1. Definitions. Each capitalized term used herein and not otherwise defined
herein shall have the definition assigned to such term in Schedule Z to the
Master Security Agreement dated as of September 30, 2005 among Sociedad Minera
Cerro Verde S.A.A., Japan Bank for International Cooperation, Sumitomo Mitsui
Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New York
Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru (as amended from
time to time, the "Master Security Agreement" or "MSA"). The rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
are incorporated herein as if set forth herein.



     2. Representations and Warranties. Each Consenting Party hereby represents
and warrants with respect to itself that:

          (a) It is an entity duly organized, validly existing and is in good
     standing under the laws of the place in which it is organized.

          (b) It has full power and authority to execute and deliver the
     Shareholders Agreement and this Consent and to perform its obligations
     thereunder and hereunder in accordance with the terms provided therein and
     herein and will not require any additional consent or approval of its board
     of directors, any of its shareholders or any other Person which it has not
     already obtained.

          (c) Each of the Shareholders Agreement and this Consent has been duly
     authorized, executed and delivered by it and constitutes a valid and
     legally binding agreement, enforceable in accordance with its terms,
     subject to bankruptcy, insolvency, fraudulent conveyance, reorganization,
     moratorium and similar laws of general applicability relating to or
     affecting creditors' rights and to general equity principles.

          (d) All Governmental Approvals and other third party approvals which
     are necessary for (i) the execution and delivery by it of the Shareholders
     Agreement and this Consent, (ii) the performance of its obligations
     thereunder and hereunder and (iii) the exercise by the Offshore Collateral
     Agent of the rights and remedies with respect to the Shareholders Agreement
     (other than Governmental Approvals, if any, required to transfer the rights
     and remedies of the Borrower in the Shareholders Agreement to the Offshore
     Collateral Agent or its assignees) have been obtained and are in full force
     and effect.

          (e) There is no provision of law, statute, regulation, rule, order,
     injunction, decree, writ or judgment, no provision of its organizational
     documents and no provision of any mortgage, indenture, contract or
     agreement binding on it or affecting its properties, which would prohibit,
     conflict with or in any way prevent its execution, delivery, or performance
     of the terms of the Shareholders Agreement or this Consent.

          (f) There is no action, suit, proceeding or investigation, at law or
     in equity, or before any Governmental Authority or other Person, pending
     or, to the best knowledge of such Consenting Party, threatened, against or
     affecting it or its assets that (i) questions the validity of the
     Shareholders Agreement or this Consent or any action taken or to be taken
     pursuant hereto or thereto, or (ii) in any case or in the aggregate would
     reasonably be expected to result in a material adverse effect on the
     ability of such Consenting Party to perform its obligations hereunder or
     thereunder.


                                       2



          (g) Such Consenting Party is not in default under any material
     covenant or obligation under the Shareholders Agreement and no such default
     has occurred prior to the date hereof. To the best knowledge of such
     Consenting Party, the Borrower is not in default under any material
     covenant or obligation under the Shareholders Agreement and no such default
     has occurred prior to the date hereof. Such Consenting Party and, to the
     best knowledge of such Consenting Party, the Borrower, have complied with
     all conditions precedent to the respective obligations of such party to
     perform under the Shareholders Agreement. The Shareholders Agreement, as of
     the date hereof, is in full force and effect, has not been amended, and
     none of the Borrower's rights under the Shareholders Agreement have been
     waived.

     3. Consent and Agreement. Each Consenting Party hereby acknowledges and
agrees that, notwithstanding any other provision in the Shareholders Agreement:

          (a) Pursuant to the Master Security Agreement, the Borrower has
     granted, transferred and assigned to the Offshore Collateral Agent, as
     collateral agent for the benefit of Senior Lenders named in the Master
     Security Agreement, all right, title and interest which Borrower now has or
     which shall hereafter arise in and to the Shareholders Agreement and all
     claims resulting from any failure of performance or compliance with any of
     the provisions of the Shareholders Agreement, together with full power and
     authority, in its own name or in the name of Borrower or otherwise, to
     enforce and request payment under the Shareholders Agreement and to
     collect, receive and give receipts and releases for such amounts.

          (b) The Consenting Parties hereby irrevocably consent to and accept
     the grant, transfer and assignment by the Borrower to the Offshore
     Collateral Agent for the benefit of and on behalf of the Senior Lenders of
     all of Borrower's right, title and interest in the Shareholders Agreement
     and all claims resulting from any failure of performance or compliance with
     any of the provisions of the Shareholders Agreement, together with full
     power and authority, in the name of the Borrower, to enforce the
     Shareholders Agreement against the Consenting Parties, it being understood
     and agreed that any enforcement by the Offshore Collateral Agent shall not
     require any further consent from the Consenting Parties or constitute a
     default under the Shareholders Agreement. The Consenting Parties hereby
     irrevocably further agree for the benefit of the Offshore Collateral Agent
     and the Senior Lenders in case of a default under the Shareholders
     Agreement by the Borrower, to accept performance by a Person designated by
     the Offshore Collateral Agent (or one or more of its representatives or
     assignees (the "Designee"), as instructed by the Administrative Agent) and
     neither the Offshore Collateral Agent nor its Designee shall be subject to
     any defense arising from the Borrower's failure to perform, provided that
     the Designee's performance shall in


                                       3



     all other respects be in accordance with the provisions of the Shareholders
     Agreement. In no event shall any grant, transfer, assignment or acceptance
     of performance pursuant to this Section 3(b) change or modify Borrower's
     obligations to the Consenting Parties thereunder.

          (c) The Consenting Parties shall deliver to the Offshore Collateral
     Agent at the address specified in Section 5(j), or at such other address as
     the Offshore Collateral Agent may designate in writing from time to time to
     the Consenting Parties, concurrently with delivery thereof to the Borrower,
     a copy of any material notice, request, demand or other document given by
     the Consenting Parties in connection with the Shareholders Agreement, along
     with notice of any material breach, termination or claim of termination
     under the Shareholders Agreement for which notice to the Borrower is
     required under the Shareholders Agreement.

          (d) The Consenting Parties will not, without the prior written consent
     of the Supermajority Facility Lenders, take any action to amend, supplement
     or otherwise modify the Shareholders Agreement (as in effect on the date
     hereof) unless such amendment or modification would be permitted by Section
     7.12 of the Master Participation Agreement.

          (e) The Consenting Parties and the Borrower hereby further acknowledge
     and agree that the Consenting Parties will not sell, assign, transfer or
     otherwise dispose of (by operation of law or otherwise) any part of its
     interest in the Shareholders Agreement other than pursuant to a Transfer in
     accordance with the Transfer Restrictions Agreement.

          (f) In the event that the Designee succeeds to the Borrower's interest
     under the Shareholders Agreement, whether by foreclosure or otherwise, the
     Designee may elect (but shall not be required to) by written notice of
     assumption delivered to the Consenting Parties to assume liability for all
     of the Borrower's obligations under the Shareholders Agreement (and the
     Consenting Parties shall not be obligated to recognize any such succession
     until they have each received such written notice of assumption); provided,
     however that such liability shall not include any liability for claims of
     the Consenting Parties against the Borrower arising from the Borrower's
     failure to perform during the period prior to the Offshore Collateral
     Agent's or such Designee's succession to the Borrower's interest in and
     under the Shareholders Agreement. Except as otherwise set forth in the
     immediately preceding sentence, the Designee shall not be liable for the
     performance or observance of any of the obligations or duties of the
     Borrower under the Shareholders Agreement, nor shall the grant of a
     security interest in the Shareholders Agreement by the Borrower to the
     Offshore Collateral Agent on behalf of the Senior Lenders give rise to any
     duties or obligations whatsoever on the part of the Offshore Collateral
     Agent owing to any of the Consenting Parties.


                                       4



          (g) Upon the exercise by the Offshore Collateral Agent on behalf of
     the Senior Lenders of any of the remedies set forth in the Master Security
     Agreement, the Offshore Collateral Agent may, to the extent permitted by
     Article V of the Master Security Agreement, assign its rights and interests
     and the rights and interests of the Borrower under the Shareholders
     Agreement to any purchaser or transferee of the Offshore Collateral, if
     such purchaser or transferee shall (i) assume all of the obligations of the
     Borrower under the Shareholders Agreement and (ii) be, in the reasonable
     opinion of the Consenting Parties, sufficiently creditworthy to perform the
     obligations of the Borrower under the Shareholders Agreement. Upon such
     assignment and assumption, the Senior Lenders shall be relieved of all
     obligations under the Shareholders Agreement arising after such assignment
     and assumption.

          (h) In the event that the Designee shall assume or be liable for any
     obligation under the Shareholders Agreement (as contemplated in clause (f)
     above or otherwise), such liability shall be limited solely to such party's
     interest in the Offshore Collateral (and no officer, director, employee,
     shareholder or agent thereof shall have any liability with respect
     thereto).

     4. Payment Arrangements. The Consenting Parties hereby agree that they
shall make, or cause to be made by any person making payment on its behalf, all
payments due or to become due from it under the Shareholders Agreement by wire
transfer in U.S. Dollars of same day funds directly to Proceeds Account account
no. 105487, in the name of Citibank N.A., at Citibank N.A. or such other account
or accounts at such other bank or banks as are designate from time to time by
the Offshore Collateral Agent.

     5. Miscellaneous.

          (a) This Consent shall be binding upon each Consenting Party, its
     successors and assigns and shall inure, together with the rights and
     remedies of the Offshore Collateral Agent hereunder, to the benefit of the
     Borrower and the Offshore Collateral Agent on behalf of the Senior Lenders
     and their respective successors, transferees and assigns.

          (b) This Consent and the obligations of the Consenting Parties
     hereunder shall terminate and be of no further force and effect on the date
     on which the Consenting Parties receive a notice from the Offshore
     Collateral Agent stating that all of the Borrower's obligations under the
     Master Security Agreement shall have terminated in accordance with the
     terms thereof.

          (c) No amendment, modification or waiver of any provision of this
     Consent shall be effective unless the same shall be in writing and signed
     by all of


                                       5



     the parties hereto and then such waiver shall be effective only in the
     specific instance and for the specific purpose for which it was given.

          (d) THIS CONSENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
     THE LAWS OF THE STATE OF NEW YORK.

          (e) The Consenting Parties hereby irrevocably consent and agree, for
     the benefit of the Offshore Collateral Agent, that any legal action, suit
     or proceeding against them with respect to their obligations, liabilities
     or any other matter under or arising out of or in connection with this
     Consent may be brought in any Federal or State court located in New York
     County in the City of New York and hereby irrevocably accept and submit to
     the non-exclusive jurisdiction of such court with respect to any such
     action, suit or proceeding. The Consenting Parties hereby waive any
     objection which they may now or hereafter have to the laying of venue of
     any of the aforesaid actions, suits or proceedings, brought in any such
     court and hereby further waive and agree not to plead or claim in any such
     court that any such action, suit or proceeding brought therein has been
     brought in an inconvenient forum.

          (f) Each party hereto hereby waives, to the fullest extent permitted
     by applicable law, any and all right to trial by jury in any legal
     proceeding arising out of or relating to this Consent or the transactions
     contemplated hereby.

          (g) If any provision of this Consent shall be held to be invalid,
     illegal or unenforceable, the validity, legality and enforceability of the
     remaining provisions in such jurisdiction and the validity, legality and
     enforceability of such provision in any other jurisdiction shall not in any
     way be affected or impaired.

          (h) The headings used in this Consent are for convenience only and
     will not affect the construction or interpretation of any of the terms of
     this Consent.

          (i) This Consent may be executed in any number of counterparts, all of
     which taken together shall constitute one and the same instrument, and any
     of the parties hereto may execute this Consent by signing any such
     counterpart.

          (j) Any notice, request, demand, consent, designation, direction,
     instruction, certificate, report or other communication to be given
     hereunder shall be given in the English language and will be duly given
     when delivered in writing or facsimile transmission (with written
     confirmation of receipt, which confirmation may be by facsimile
     transmission) to a party at its address and facsimile transmission numbers
     as indicated below or to such other address as may be furnished for this
     purpose by such party (any such communication that is


                                       6



     not in writing shall be confirmed in writing), provided that any notice,
     request, demand, consent, designation, direction, instruction, certificate,
     report or other communication sent to the Offshore Collateral Agent shall
     be deemed effective upon actual receipt thereof:

     If to the Offshore Collateral Agent, at

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013
          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

     If to the Consenting Parties, at

          SMM Cerro Verde Netherlands B.V.
          c/o Sumitomo Metal Mining Co., Ltd.
          11-3, 5-Chome, Shimbashi
          Minato-ku, Tokyo 105
          Japan
          Attention: General Manager, Mineral Resources Division
          Telecopier: (81)-3-3436-7997

          with a copy to:

          Sumitomo Metal Mining America Inc.
          Corresponsalia En Chile
          Roger de Flor 2950, Piso 5
          Las Condes, Santiago, Chile
          Attention: General Manager
          Telecopier: (56)-2-362-9289

     and:

          Sumitomo Corporation Del Peru S.A.
          Jr. San Martin No. 864 Ofi. 701
          Miraflores, Lima, Peru
          Attention: President
          Telecopier: (51)-1-447-0506


                                       7



          Sumitomo Metal Mining Co., Ltd.
          11-3, 5-Chome, Shimbashi
          Minato-ku, Tokyo 105
          Japan
          Attention: General Manager, Mineral Resources Division
          Telecopier (Fax): (81)-3-3436-7997

          Sumitomo Corporation
          1-8-11, Harumi
          Chuo-ku, Tokyo 104-8610
          Japan
          Attention: General Manager, Nonferrous Metals and Raw Materials
          Department
          Telecopier (Fax): (81)-3-5166-6423

          Summit Global Management II B.V.
          c/o Sumitomo Corporation
          1-8-11, Harumi
          Chuo-ku, Tokyo 104-8610
          Japan
          Attention: General Manager, Nonferrous Metals and Raw Materials
          Department
          Telecopier (Fax): (81)-3-5166-6423

          Cyprus Climax Metals Company
          c/o Phelps Dodge Mining Company
          One N. Central Avenue
          Phoenix, Arizona 85004
          Attention: President
          Telephone: (602) 366-8100
          Telecopier: (602) 366-7383

          with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          Attention: General Counsel
          Telephone: (602) 366-8100
          Telecopier: (602) 366-7383


                                       8



          Cia. De Minas Buenaventura S.A.A.
          Carlos Villaran 790
          Urb, Santa Catalina, Lima 13, Peru
          Attention: President
          Telecopier: (51)-1-471-7349

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          Attention: General Counsel
          Telephone: (602) 366-8100
          Telecopier: (602) 366-7383

                             [SIGNATURES TO FOLLOW]


                                       9



     IN WITNESS WHEREOF, the undersigned by its officer duly authorized has
caused this Consent to be duly executed and delivered as of the day and year
first above written.

                                        SMM CERRO VERDE NETHERLANDS B.V.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        SUMITOMO METAL MINING CO., LTD.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        SUMITOMO CORPORATION


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        SUMMIT GLOBAL MANAGEMENT II B.V.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                       10



                                        CYPRUS CLIMAX METALS COMPANY


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        PHELPS DODGE CORPORATION


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        COMPANIA DE MINAS BUENAVENTURA S.A.A.


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        CITIBANK, N.A., as Offshore Collateral
                                        Agent


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


Acknowledged and Agreed:

SOCIEDAD MINERA CERRO VERDE S.A.A.


By
   ----------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                       11



                                    Exhibit I

             Form of Consent to Assignment (Peruvian law agreement)



Lima, 29 de Septiembre de 2005

Senor Ingeniero
JESUS FIGUEROA
Gerente General - Sociedad Minera Cerro Verde S.A.A.
Presente.-

                                             Ref. Cesion de Posicion Contractual

De nuestra consideracion:

Tenemos el agrado de dirigirnos a usted a fin de saludarlo y, al mismo tiempo,
dar respuesta a su solicitud para que vuestra representada pueda, de acuerdo a
los terminos que a continuacion se mencionan, ceder sus derechos y obligaciones
asumidos en el Contrato de Manipuleo, Carga y Transporte Bimodal de Concentrado,
suscrito con nuestra representada, a favor de Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Cooperation, The Bank of Tokyo - Mitsubishi
Ltd., KFW, Calyon New York Branch, The Royal Bank of Scotland, The Bank of Nova
Scotia y Mizuho Corporate Bank Ltd.

Al respecto, por medio de la presente y en atencion a lo solicitado,
manifestamos nuestro consentimiento para que su representada ceda su posicion
contractual asumida en el Contrato de Manipuleo, Carga y Transporte Bimodal de
Concentrado, suscrito con nuestra representada, a favor de los referidos bancos
o de quienes estos designen. Dejamos expresa constancia que nuestro
consentimiento a la cesion de posicion contractual surtira efectos unicamente en
caso se genere un evento cuya consecuencia permita a las entidades financieras
arriba mencionadas hacer efectiva la cesion de posicion contractual, cuyo
consentimiento se otorga por el presente instrumento.

Sin otro particular, quedamos de usted.


- -------------------------------------   ----------------------------------------
P. PERU RAIL S.A.                       Filip Boyen
Armando Pareja                          Director Alterno
Director Financiero



(TRANSALTISA S.A. CORPORACION CERVESUR LOGO)

GG-027/2005

Arequipa, 30 de setiembre del 2005

Senores

SOCIEDAD MINERA CERRO VERDE S.A.A.

Asiento Minero Cerro Verde - Uchumayo
Casilla Postal 299
Arequipa

Ref.: Correos electronicos del 27 y del 30 de setiembre del 2005, enviados por
Julia Torreblanca.

Att: Dra, Julia Torreblanca.

De mi mayor consideracion:

Por medio de la presente y en atencion a lo solicitado en la comunicacion de la
referencia, dejamos expresa constancia del otorgamiento de nuestro
consentimiento para que puedan Uds. si lo estiman necesario, ceder sus derechos
y obligaciones asumidos en el CONTRATO DE SERVICIO DE TRANSPORTE DE CATODOS DE
COBRE, MERCADERIAS Y ACIDO SULFURICO, a favor de Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Cooperation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank, Ltd.y/o sus representantes, agentes o
personas designadas.

Me valgo de la oportunidad para testimoniarles nuestra mas alta consideracion.

Atentamente

TRANSALTISA S.A.                        TRANSALTISA S.A.


/s/ Maximo Cornejo Paredes              /s/ Henry Cervantes Loayza
- -------------------------------------   ----------------------------------------
MAXIMO CORNEJO PAREDES                  HENRY CERVANTES LOAYZA
Gerente General                         Gerente de Operaciones

c.c. Cristian Moran (e mail), Julia Torreblanca (e mail), GO, GT, GA, JLeg.,
     JfyS File

[Letterhead]

                                                     (CORPORACION CERVESUR LOGO)



                                    Exhibit J

                    Form of Notice of Conditional Assignment



                                                                       EXHIBIT J

                    FORM OF NOTICE OF CONDITIONAL ASSIGNMENT

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of the Company]
[Address of the Company]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the [name of the Agreement] (the "Agreement"), dated
__, entered into by and between Sociedad Minera Cerro Verde S.A.A. ("SMCV") and
[name of the Company] ("you") and (ii) [Section __ of the Agreement / your
letter dated __], whereby you consent that SMCV, at its sole discretion, may
assign, for the benefit and on behalf of the senior lenders of SMCV, as
described in Annex A (together with its successors and assigns, the "Senior
Lenders") its contractual position under the Agreement.

Pursuant to Article 1435 of the Civil Code, SMCV hereby gives you notice that it
has conditionally assigned in favor of [name of Onshore Collateral Agent]
(together with its successors and assigns, the "Assignee") for the benefit and
on behalf of the Senior Lenders, its contractual position under the Agreement.
Such conditional assignment to the Assignee shall become effective with respect
to you upon your receipt of a notice of effectiveness from the Assignee, without
the participation of SMCV, substantially in the form attached hereto as Annex B
(the "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment to the Assignee shall be in full and force and effect vis-a-vis you.

You are hereby irrevocably instructed that, immediately after your receipt of
the Notice of Effectiveness and at all times thereafter, the rights and
obligations of SMCV under the Agreement shall be deemed assigned to the Assignee
pursuant to this assignment of contractual position ("cesion de posicion
contractual") in accordance with Article 1435 of the Civil Code.

Sincerely yours,

SOCIEDAD MINERA CERRO VERDE S.A.A.


- -------------------------------------
By:
    ---------------------------------
Title:
       ------------------------------



                                     Annex A

                                 Senior Lenders

1.   JAPAN BANK FOR INTERNATIONAL COOPERATION,

2.   KFW

3.   CALYON NEW YORK BRANCH

4.   THE ROYAL BANK OF SCOTLAND PLC

5.   THE BANK OF NOVA SCOTIA

6.   MIZUHO CORPORATE BANK, LTD.,

7.   SUMITOMO MITSUI BANKING CORPORATION

8.   THE BANK OF TOKYO-MITSUBISHI, LTD.


                                        2



                                     Annex B

                             NOTICE OF EFFECTIVENESS

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of the Company]
[Address of the Company]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the [name of the Agreement] (the "Agreement"), dated
__, entered into by and between Sociedad Minera Cerro Verde S.A.A. ("SMCV") and
[name of the Company] ("you"), and (ii) SMCV's notarial letter (the "Notice of
Conditional Assignment"), dated __ and received by you on __, whereby SMCV gave
you notice pursuant to Article 1435 of the Civil Code that it had conditionally
assigned in favor of the undersigned (together with its successors and assigns,
the "Assignee"), for the benefit and on behalf of the senior lenders of SMCV, as
described in Annex A of the Notice of Conditional Assignment (together with its
successors and assigns, the "Senior Lenders"), it's contractual position under
the Agreement.

As stated by SMCV in the Notice of Conditional Assignment, such conditional
assignment shall become effective with respect to you upon your receipt of this
notice (this "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment to the Assignee shall be in full force and effect vis-a-vis you. In
addition, as stated by SMCV in the Notice of Conditional Assignment, this Notice
of Effectiveness is being sent to you without the participation of the SMCV.

Therefore, upon your receipt of this Notice all of the rights and obligations
of SMCV pursuant to the Agreement shall be deemed assigned to the Assignee, for
the benefit and on behalf of the Senior Lenders of SMCV, whereupon and
thereafter this assignment of contractual position ("cesion de posicion
contractual") shall be in full force and effect vis-a-vis you in accordance with
Article 1435 of the Civil Code.

Sincerely yours,

[NAME OF ONSHORE COLLATERAL AGENT]


- -------------------------------------
By:
    ---------------------------------
Title:
       ------------------------------


                                        3



                                                                    APPENDIX I-1

                              Legal opinion of Rodrigo, Elias & Medrano Abogados
                                                                       (Closing)

                                  Appendix I-1

              Form of Opinion of Rodrigo, Elias & Medrano, Abogados



                                                                    APPENDIX I-1

                              Legal opinion of Rodrigo, Elias & Medrano Abogados
                                                                       (Closing)

Lima, __

Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger

Ladies and Gentlemen:

We have acted as special Peruvian counsel to Sociedad Minera Cerro Verde S.A.A.
(the "Borrower") in connection with the following agreements:

(i)  the Master Participation Agreement, dated __, among the Borrower, the
     Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators,
     the Lead Arrangers and the Administrative Agent;

(ii) the JBIC Loan Agreement, dated __, among the Borrower, JBIC and the JBIC
     Facility Agent;

(iii) the KfW Loan Agreement, dated __, between the Borrower and KfW;

(iv) the Commercial Banks Loan Agreement, dated __, among the Borrower, the
     Commercial Banks and the Administrative Agent;

(v)  the Master Security Agreement, dated __, among the Borrower, the Senior
     Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
     Lead Arrangers, the Administrative Agent, the Trustee, the Offshore
     Collateral Agent and the Onshore Collateral Agent;

(vi) the Promissory Notes, each dated __, issued by the Borrower in favor of
     each of the Senior Facility Lenders;

(vii) the Mining Mortgage Agreement, dated __, between the Borrower and the
     Onshore Collateral Agent;



(viii) the Mining Pledge Agreement, dated __, between the Borrower and the
     Onshore Collateral Agent;

(ix) the Mining Floating Pledge Agreement, dated __, between the Borrower and
     the Onshore Collateral Agent;

(x)  the Conditional Assignment of Rights Agreement, dated __, between the
     Borrower and the Onshore Collateral Agent;

(xi) the Escrow Accounts Agreement, dated __, among Banco de Credito del Peru,
     as escrow agent, the Borrower and the Onshore Collateral Agent;

(xii) the Escrow Accounts Agreement, dated __, among Citibank del Peru S.A., as
     escrow agent, the Borrower and the Onshore Collateral Agent;

(xiii) the Operator's Agreement;

(xiv) the Consent and Agreement, dated __, among the Operator, the Offshore
     Collateral Agent and the Borrower;

(xv) each of the Power Supply Agreements;

(xvi) the SMM Concentrate Sales Agreement;

(xvii) the letter of amendment to the SMM Concentrate Sales Agreement, dated __,
     between SMM and the Borrower;

(xviii) the Concentrate Sales Agreement, dated __, between PD Sales Company and
     the Borrower (the "Concentrate Sales Agreement");

(xix) the Cathodes Sales Agreement, dated __, between PD Sales Company and the
     Borrower;

(xx) the Parent Company Guarantee, dated __, between PDC and the Borrower in
     connection with certain obligations of PD Sales Company;

(xxi) the Parent Company Guarantee, dated __, between PDC and the Borrower in
     connection with certain obligations of the Operator;

(xxii) the Construction Agreement;

(xxiii) the Engineering Agreement;


                                        2



(xxiv) the Port Services Agreement;

(xxv) each of the Transportation Agreements; [and]

(xxvi) the Consent and Agreement, dated __, among Fluor Canada Ltd., the
     Offshore Collateral Agent and the Borrower[; and

(xxvii) the Mortgage Agreement, dated __, between the Borrower and the Onshore
     Collateral Agent](23).

Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement. The term "Offshore Agreements"
shall mean, collectively, the agreements described in (i) through (v), (xiii),
(xiv), (xvi) through (xxiii) and (xxvi) above. The term "Security Agreements"
shall mean, collectively, the agreements described in (vii) through (ix) [and
(xxvii)] above. The term "Agreements" shall mean, collectively, the agreements
described in (i) through [(xxvi) / (xxvii)] above. The term "Closing Opinion
Peruvian Governmental Approvals" shall mean, collectively, the Environmental
Impact Study and the permit described in opinions 20 and 21 below, respectively.

This opinion is delivered to you pursuant to Section 5.01(g)(i) of the Master
Participation Agreement.

In rendering this opinion, we have assumed, to the extent relevant with respect
to each of the Agreements, that (except as to the Borrower):

(a) the Agreements have been duly authorized by, have been executed and
delivered by, and constitute legal, valid, binding and enforceable obligations
of, all of the parties to such documents;

(b) all signatories to the Agreements have been duly authorized;

(c) all of the parties to the Agreements are duly organized and validly existing
and have the power and authority (corporate, limited liability company,
partnership or other) to execute, deliver and perform the Agreements; and

- ----------
(23) Include only if required to be executed prior to rendering this opinion in
     accordance with the Master Participation Agreement.


                                        3



(d) each Agreement which is governed by a law other that Peruvian law
constitutes the legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, pursuant to such applicable
governing law.

In rendering this opinion, we also have assumed that, at the time of so doing,
the officials which executed the Closing Opinion Peruvian Governmental Approvals
were duly authorized and had the power and authority to execute the Closing
Opinion Peruvian Governmental Approvals on behalf of the relevant Peruvian
Governmental Authority.

In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower, and such questions of law, as we have considered
necessary or appropriate for the purposes of this opinion.

Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:

1.   The Borrower is a sociedad anonima abierta listed on the Lima Stock
     Exchange, duly incorporated, validly existing and in good standing under
     the laws of Peru. The Borrower has all requisite power to own its property
     and to carry on the Business to the extent and as contemplated by the
     Agreements.

2.   The Borrower has all requisite corporate power to execute and deliver, and
     to incur and perform its obligations under, each of the Agreements.

3.   The execution and delivery by the Borrower, and the incurrence and
     performance by the Borrower, of its obligations under each of the
     Agreements have been duly authorized by all necessary corporate action on
     the part of the Borrower.

4.   Each Agreement has been duly executed and delivered by the Borrower and
     constitutes the legal, valid and binding obligation of the Borrower,
     enforceable against the Borrower in accordance with its terms.

5.   Under Peruvian conflict of laws principles, the stated choice of New York
     law to govern the Offshore Agreements (other than each of the Construction
     Agreements) and, if applicable, the Promissory Notes, and the stated choice
     of Arizona law to govern the Construction Agreements, will be honored by
     the courts of Peru, except for the limitations of (a) Article 2049 of the
     Peruvian Civil Code, under which provisions of foreign law shall be
     excluded if they are incompatible with international public policy or good
     morals, (b) Article 2088 of the Peruvian Civil Code, under which the
     creation, content and extinction of security interests on tangible assets
     located in Peru is governed by Peruvian law,


                                        4



     and (c) Article 2.1 of the Insolvency System General Act, Law No. 27809,
     under which any insolvency, bankruptcy, moratorium, fraudulent conveyance
     or transfer involving entities domiciled in Peru shall be ruled by Peruvian
     law.

6.   No authorization, approval or consent, and no filing or registration with,
     any Governmental Authority of Peru (except as has already been obtained or
     accomplished and is in full force and effect) is required on the part of
     the Borrower for (a) the execution or delivery of, or for the incurrence or
     performance of any obligations under, any of the Agreements, (b) the
     payment in Dollars by the Borrower when due (whether at stated maturity, by
     acceleration or otherwise) of the Senior Facility Loans Obligations, and
     (c) the granting by the Borrower of a first priority perfected Lien in
     favor of the Onshore Collateral Agent, for the benefit and on behalf of the
     Secured Parties, purported to be granted by or pursuant to the Security
     Agreements.

7.   The execution and delivery by the Borrower of, the incurrence and
     performance thereby of its obligations under, and the consummation of the
     other transactions contemplated by, any of the Agreements do not and will
     not (a) violate any provision of the organizational documents of the
     Borrower, (b) violate or conflict with any applicable law, rule, regulation
     or decree of Peru, (c) violate or conflict with any treaty or other
     international agreement to which Peru is subject, or (d) except for the
     Liens created pursuant to the Security Agreements, result in the creation
     or imposition of any Lien upon any Project Property pursuant to the terms
     of any of the Agreements.

8.   Each of the Agreements is in proper legal form for the enforcement thereof
     against the Borrower in the courts of Peru, as applicable. No registration,
     notarization or other formality (including, without limitation, payment of
     any stamp or similar tax) is required to be accomplished in Peru (except as
     has already been accomplished and is in full force and effect) for the
     legality, validity, enforceability or admissibility in evidence of any of
     the Agreements in Peru, as applicable.

     Please note that the admissibility in evidence of the Agreements before any
     Peruvian court requires such documents, if written in English or any
     language other than Spanish, to be officially translated into Spanish by a
     duly authorized public translator in Peru. Such translation may be done at
     the time that enforcement is sought.

9.   The Borrower is subject to civil and commercial law with respect to its
     obligations under each of the Agreements, and the making and performance by
     it of such Agreements constitute private and commercial acts, rather than
     governmental or public acts. Neither the Borrower nor any of its
     properties,


                                        5



     assets or revenues has any immunity from jurisdiction of any court or from
     any legal process (whether through service, notice, attachment prior to
     judgment, attachment in aid of execution, execution or otherwise).

10.  The Security Agreements create a valid and fully perfected first priority
     Lien in favor of the Onshore Collateral Agent, for the benefit and on
     behalf of the Secured Parties, upon the properties and rights purported to
     be covered thereby as security for the obligations of the Borrower,
     superior in right to any other Lien (other than Permitted Liens), and
     enforceable in Peru against the Borrower in accordance with its terms and
     against any trustee in insolvency proceedings and any attaching creditor or
     third party (including a judgment creditor), as may be limited by
     bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
     or transfer or other similar laws relating to or affecting the rights of
     creditors generally (and by the possible judicial application of foreign
     laws or governmental action affecting the rights of creditors generally).
     No authorization, registration, filing, notarization, recordation or other
     formality in Peru (except as has already been obtained or accomplished and
     is in full force and effect) is required to be obtained or accomplished,
     and no fee, duty, or tax (except as has already been paid) is required to
     be paid, in each case for the continued perfection and priority of such
     Lien.

11.  Under applicable law of Peru currently in effect, no stamp or other similar
     taxes or levies, imposts, deductions, charges, compulsory loans or
     withholdings whatsoever are or will be imposed, assessed, levied or
     collected from the Borrower or the Senior Facility Lenders by Peru or any
     political subdivision or taxing Governmental Authority thereof or therein
     or on or in respect of any of the Agreements.

12.  The submission by the Borrower to the non-exclusive jurisdiction of the
     Federal or State Court located in New York County in the City of New York,
     New York, and any appellate court from any thereof, with respect to matters
     arising under or in connection with any of the Offshore Agreements (other
     than each of the Construction Agreements) and, if applicable, the
     Promissory Notes, and the submission by the Borrower to the non-exclusive
     jurisdiction of the Federal or State Court located in the City of Phoenix,
     Arizona, and any appellate court from any thereof, with respect to matters
     arising under or in connection with any of the Construction Agreements,
     pursuant to which the Borrower has so submitted in each case, is valid and
     effective under the laws of Peru, except for the limitations of Article
     2060 of the Peruvian Civil Code, under which such submission shall be
     denied if the controversy concerns matters subject to the exclusive
     jurisdiction of Peruvian courts (i.e., in rem rights related to real estate
     located in Peru, criminal offences in Peru or when the parties have
     expressly or implicitly submitted to


                                        6



     Peruvian jurisdiction), or if such submission would constitute an abuse of
     law or would contravene Peruvian public policy.

     The Borrower is generally subject to suit in Peru, and its submission to
     the non-exclusive jurisdiction of the courts of the cities of Lima, Peru,
     and Arequipa, Peru, as applicable, with respect to matters arising under or
     in connection with any Agreement, is valid and effective.

13.  A final, non-appealable judgment against the Borrower obtained in the
     jurisdiction agreed to under the Offshore Agreements would be recognized,
     conclusive and enforceable in the courts of Peru without re-examination on
     the merits; provided that the following conditions and requirements are
     met:

     (a)  there is a treaty between Peru and the country in which such judgment
          has been rendered, and the provisions of such treaty shall apply;

     (b)  in the absence of a treaty, the reciprocity rule is applicable (such
          reciprocity being presumed), under which a judgment given by a foreign
          competent court will be admissible in the Peruvian courts and will be
          enforceable thereby, except if according to such foreign law (i)
          judgments issued by Peruvian courts are not admissible in such foreign
          country, or (ii) judgments issued by Peruvian courts are subject to
          re-examination by such foreign competent court of the issues dealt
          therein;

     (c)  in either (a) or (b), (i) such judgment does not resolve matters which
          are subject to exclusive jurisdiction of Peruvian courts, (ii) the
          foreign competent court issuing the judgment holds jurisdiction under
          the rules of international conflicts of law and general principles of
          international procedural jurisdiction, (iii) the defendant against
          whom the enforcement is sought has been summoned in accordance with
          the laws of the place in which the action was brought up and a
          reasonable time to appear before the foreign court as well as due
          procedural guarantees to defend the case were granted to the
          defendant, (iv) the foreign judgment has the authority of res judicata
          under the laws of such foreign jurisdiction, (v) there are no pending
          legal proceedings in Peru between the same parties which relate to the
          same matters, started prior to the filing of the complaint that
          concluded with such foreign judgment, (vi) such foreign judgment is
          not compatible with other foreign judgments which meet the
          admissibility and enforceability requirements established by Peruvian
          law which have been previously issued with respect to the same subject
          matter, and (vii) such foreign judgment is not contrary to public
          policy or good morals.


                                        7



     As of this date, there is no treaty between Peru and the State of New York,
     the State of Arizona or the United States of America on the enforcement of
     foreign judgments. In addition, we have no reason to believe that any
     obligation under the Agreements would be contrary to Peruvian public policy
     and international treaties to which Peru is subject or generally accepted
     principles of international law.

     Assuming that the foreign final judgment complies with the standards set
     forth in this opinion, and in the absence of any condition referred to
     above which would render a foreign judgment unenforceable, the respective
     parties would be entitled to enforce such judgment in Peru by proceedings
     for the enforcement of a foreign final judgment under the laws of Peru.

14.  The arbitration clause of each of the Master Participation Agreement, the
     Operator's Agreement, the SMM Concentrate Sales Agreement, the Concentrate
     Sales Agreement, the Cathodes Sales Agreement and each of the Construction
     Agreements is valid and binding to refer any dispute contemplated
     thereunder to arbitration, pursuant to and in accordance with the terms and
     conditions in each case set forth therein. If applicable, a final arbitral
     award rendered by the foreign arbitration tribunal designated in each case
     therein would be recognized and enforced by the courts of Peru in
     accordance with Article 2064 of the Peruvian Civil Code and the General
     Arbitration Act, Law No. 26572, subject to the conditions and limitations
     thereof.

15.  The Senior Facility Lenders are not and will not be deemed resident,
     carrying on business, subject to taxation as such or subject to
     environmental liability in Peru solely by reason of the making of the
     Senior Facility Loans or enforcement in Peru of any of the Agreements to
     which they are a party.

16.  There are no restrictions or requirements which limit the availability or
     transfer of foreign currency for the purpose of the performance by the
     Borrower of its obligations under the Agreements.

17.  The obligations of the Borrower under (a) the Agreements rank and shall
     rank at least pari passu in priority of payment and in all other respects
     with all other unsecured and unsubordinated obligations of the Borrower
     outstanding at any time, except obligations that are mandatorily preferred
     by law, and (b) the Master Participation Agreement and the Senior Facility
     Loan Agreements rank and shall rank senior to the obligations of the
     Borrower in respect of the Subordinated Loans. No Person holding
     indebtedness of the Borrower may obtain a preference or priority over the
     obligations of the Borrower under the Senior Facility Lenders Financing
     Documents solely by reason of the agreements or instruments evidencing such
     indebtedness being executed before a notary or any other Person,


                                       8



     provided that we express no opinion with respect to the Transfer
     Restrictions Agreement to which the Borrower is not a party.

18.  Assuming that CT Corporation has, under the laws of the State of New York,
     been duly appointed by the Borrower as its agent to receive service of
     process in the State of New York, service of process made on CT Corporation
     pursuant to such appointment will, under the laws of Peru, be considered
     served personally on the Borrower and satisfy the conditions of Peruvian
     law thereto.

19.  The Core Mining Concessions and the mining concessions identified as
     Tiabaya 4 and Tiabaya 10 are in full force and effect in all material
     respects and the Borrower holds registered title thereto. There are no
     liens, security interests, charges or encumbrances of any nature with
     respect to the Core Mining Concessions and the mining concessions
     identified as Tiabaya 4 and Tiabaya 10 registered in the relevant registry.

20.  The Environmental Impact Study for the Sulfide Project, approved by the
     General Directorate of Mining Environmental Affairs of the Ministry of
     Energy and Mines by means of Directorial Resolution No. 438-2004-MEM/DGAAM,
     dated September 27, 2004, is in full force and effect in all material
     respects.

21.  The permit for the expansion and construction of the Beneficiation
     Concession in respect of the Sulfide Project by the Directorate of Mining
     Promotion of the Ministry of Energy and Mines, dated October 26, 2004, is
     in full force and effect in all material respects.

22.  The SMCV Shares comprise all of the issued and outstanding shares of
     capital stock of the Borrower held by the Shareholders at the date hereof
     and consist of duly authorized, validly issued, fully paid and
     non-assessable shares of Common Stock registered in CAVALI ICLV S.A. and/or
     the share registry of the Borrower, as applicable, as follows:

     [NUMBER OF SHARES AND APPROXIMATE PERCENTAGE OF OVERALL SHARES FOR EACH
     SHAREHOLDER]

In addition, with respect to the Share Pledge Agreement, dated __, among each of
the Shareholders and the Onshore Collateral Agent (the "Share Pledge
Agreement"), and subject to the assumption that each of CCMC and the Sumitomo
Participant is duly incorporated, validly existing and in good standing under
the laws of the country or state of its incorporation, that each of them has all
requisite corporate power to execute and deliver the power of attorney to be
represented in Peru in respect of the Share Pledge Agreement and the
transactions thereunder and that the execution and delivery by each of them, and
incurrence and performance by each of them, of the Share Pledge Agreement


                                        9



does not and will not (i) violate any provision of its respective organizational
documents nor (ii) violate or conflict with any applicable law, rule, regulation
or decree other than those of Peru, we are of the opinion that:

(A)  Each of CCMC and the Sumitomo Participant has granted sufficient powers of
     attorney for the execution and delivery by each of them, and the incurrence
     and performance by each of them, of its obligations under the Share Pledge
     Agreement.

(B)  The Share Pledge Agreement constitutes the legal, valid and binding
     obligation of each of CCMC and the Sumitomo Participant, enforceable
     against each of them in accordance with its terms.

(C)  The Lien created under the Share Pledge Agreement in favor of the Onshore
     Collateral Agent, for the benefit and on behalf of the Secured Parties, in
     respect of the SMCV Shares pledged by each of CCMC and the Sumitomo
     Participant has been perfected and constitutes a valid and fully perfected
     first priority Lien in favor of the Onshore Collateral Agent, for the
     benefit and on behalf of the Secured Parties, upon such SMCV Shares,
     subject to no other equal or prior pledges, liens, security interests,
     rights of reversion, assignments or other encumbrances or rights of others
     whatsoever registered with CAVALI ICLV S.A. and/or the share registry of
     the Borrower, as applicable.

(D)  The execution and delivery by the Shareholders of, the incurrence and
     performance thereby of its obligations under, and the consummation of the
     other transactions contemplated by, the Share Pledge Agreement do not and
     will not (i) violate any provision of the organizational documents of the
     Borrower, (ii) violate or conflict with any applicable law, rule,
     regulation or decree of Peru, or (iii) violate or conflict with any treaty
     or other international agreement to which Peru is subject.

(E)  No authorization, approval or consent, and no filing or registration with,
     any Governmental Authority of Peru is required on the part of either of
     CCMC or the Sumitomo Participant for the execution or delivery of, or for
     the incurrence or performance of any obligations under, the Share Pledge
     Agreement.

(F)  The Share Pledge Agreement is in proper legal form for the enforcement
     thereof against either of CCMC or the Sumitomo Participant in the courts of
     Peru, as applicable. No registration, notarization or other formality
     (including, without limitation, payment of any stamp or similar tax) is
     required to be accomplished in Peru for the legality, validity,
     enforceability or admissibility in evidence of the Share Pledge Agreement
     in Peru, as applicable.


                                       10



(G)  Under applicable law of Peru currently in effect, no stamp or other similar
     taxes or levies, imposts, deductions, charges, compulsory loans or
     withholdings whatsoever are or will be imposed, assessed, levied or
     collected from CCMC, the Sumitomo Participant or the Senior Facility
     Lenders by Peru or any political subdivision or taxing Governmental
     Authority thereof or therein or on or in respect of the Share Pledge
     Agreement.

(H)  The submission by each of CCMC and the Sumitomo Participant to the
     non-exclusive jurisdiction of the courts of the city of Lima, Peru, with
     respect to matters arising under or in connection with the Share Pledge
     Agreement is valid and effective.

We express no opinion with respect to the ability of the Borrower to create and
perfect the industrial pledge referred to in Section 3.09(b)(ii) of the Master
Security Agreement.

The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Our opinions
set forth herein are based upon the facts in existence and laws in effect as of
the date hereof and we expressly disclaim any obligation to update our opinions
herein with respect to any changes in such facts or laws that may come to our
attention after delivery of this opinion.

We provide this opinion to you in our capacity as Peruvian counsel to the
Borrower and this opinion may not be relied for any purpose other than in
connection with the transactions contemplated by the Agreements without, in each
instance, our prior written consent.

                                        Very truly yours,


                                       11



                                  Appendix I-2

                   Form of Opinion of Debevoise & Plimpton LLP



                                                                    APPENDIX I-2

                    [Letterhead of Debevoise & Plimpton LLP]

[Date of Closing or Initial Borrowing]

To Each of the Addressees
Listed on Schedule I Attached Hereto:

                              CERRO VERDE FINANCING

Ladies and Gentlemen:

     We have acted as special New York counsel to Sociedad Minera Cerro Verde
S.A.A., a sociedad anonima abierta (the "Borrower"), Phelps Dodge Corporation, a
New York corporation ("PDC") and Cyprus Climax Metals Company (the "PD
Participant"), in connection with the Master Participation Agreement, dated as
of September __, 2005 (the "Master Participation Agreement"), among the
Borrower, Japan Bank for International Cooperation ("JBIC"), Sumitomo Mitsui
Banking Corporation ("SMBC"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"), KfW,
Calyon New York Branch(as Senior Facility Lender, Lead Arranger and Global
coordinator) ("Calyon"), The Royal Bank of Scotland plc ("RBS"), The Bank of
Nova Scotia ("Scotia"), Mizuho Corporate Bank, Ltd. ("Mizuho"), and Calyon (as
Administrative Agent) (the "Administrative Agent") and the transactions
contemplated thereby. [In this connection, although we have not acted as counsel
for Compania de Minas BuenaVentura S.A.A. ("BVN"), we are also rendering, at the
request of BVN, certain opinions concerning its involvement in the transactions
contemplated by the Master Participation Agreement.](24)

     Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in Schedule Z to the Master Security Agreement.

- ----------
(24) Should D&P not be able to include in its closing opinion the bracketed
     portions of this form of opinion, equivalent opinions will need to be
     delivered in form and substance satisfactory to the Majority Facility
     Lenders from a reputable law firm acceptable to the Majority Facility
     Lenders.



     In connection therewith, we have examined the following documents and
agreements (collectively, the "Transaction Documents");

     (i) the Master Participation Agreement;

     (ii) the Master Security Agreement, dated as of September __, 2005 (the
     "Master Security Agreement"), among the Borrower, JBIC, SMBC, BOT-M, KfW,
     Calyon, RBS, Scotia, Mizuho, the Administrative Agent, Citibank N.A. (the
     "Offshore Collateral Agent") and Citibank Del Peru S.A. (the "Onshore
     Collateral Agent");

     (iii) the Completion Guarantee, dated as of September __, 2005 (the
     "Completion Guarantee"), among Sumitomo Metal Mining Co. Ltd ("SMM"),
     Sumitomo Corporation ("SC"), BVN, Phelps Dodge Corporation ("PDC"), JBIC,
     SMBC, BOT-M., KfW, Calyon, RBS, Scotia, Mizuho, and the Administrative
     Agent;

     (iv) the Transfer Restrictions Agreement, dated as of September __, 2005
     (the "Transfer Restrictions Agreement"), among SMM Cerro Verde Netherlands,
     B.V. ("SMMBV"), BVN, PD Participant, SC, SMM, PDC, JBIC, SMBC, BOT-M, KfW,
     Calyon, RBS, Scotia, Mizuho and the Administrative Agent;

     (v) the KfW Loan Agreement, dated as of September __, 2005 (the "KfW Loan
     Agreement"), between the Borrower and KfW;

     (vi) the Commercial Banks Loan Agreement, dated as of September __, 2005
     (the "Commercial Banks Loan Agreement"), among the Borrower, Calyon, RBS,
     Scotia, Mizuho and the Administrative Agent;

     (vii) the JBIC Loan Agreement, dated as of September __, 2005 (the "JBIC
     Loan Agreement"), between the Borrower, JBIC and SMBC;

     (viii) the PD Concentrate Sales Agreement, dated as of September __, 2005
     (the "PD Concentrate Sales Agreement"), between Phelps Dodge Sales Company
     Incorporated (the "PD Buyer") and the Borrower;

     (ix) the PD Cathodes Sales Agreement, dated as of September __, 2005 (the
     "PD Cathodes Sales Agreement" and, together with the PD Concentrate Sales
     Agreement, the "PD Offtake Agreements"), between the PD Buyer and the
     Borrower;

     (x) the Parent Company Guarantee, dated as of September __, 2005 (the "PD
     Offtake Guarantee"), between PDC and the Borrower with respect to the
     obligations of the PD Buyer under the PD Offtake Agreements;


                                        2



     (xi) the Operator's Agreement, dated as of June 1, 2005 (the "Operator's
     Agreement") between the Borrower and Minera Phelps Dodge del Peru S.A.C.
     (the "Operator");

     (xii) the Consent and Agreement, dated as of September __, 2005 (the
     "Operator Consent"), between Operator and the Offshore Collateral Agent;

     (xiii) the Parent Company Guarantee, dated as of September __, 2005 (the
     "PD Operator Guarantee"), between PDC and the Borrower with respect to the
     obligations of the Operator under the Operator's Agreement;

     (xiv) The Share Pledge Agreement, dated as of __, 2005 (the Share Pledge
     Agreement"), among SMMBV, BVN, the PD Participant and the Onshore
     Collateral Agent; and

     (xv) the Consent and Agreement, dated as of September __, 2005 (the
     "Shareholder Consent"), among SMMBV, SMM, SC, Summit Global Management II
     B.V., BVN, the PD Participant, PDC and the Offshore Collateral Agent.

     We refer herein to (i) the Master Participation Agreement, the Master
Security Agreement, the KfW Loan Agreement, the JBIC Loan Agreement, the
Commercial Banks Loan Agreement, the PD Concentrate Sales Agreement, the PD
Cathodes Sales Agreement and the Operator's Agreement as the "Borrower
Transaction Documents", (ii) the Completion Guarantee, the Transfer Restrictions
Agreement, the PD Offtake Guarantee, the PD Operator Guarantee and the
Shareholder Consent as the "PD Transaction Documents", (iii) the Transfer
Restrictions Agreement, the Shareholder Consent and the Share Pledge as the "PD
Participant Transaction Documents", (iv) the Transfer Restrictions Agreement and
the Shareholder Consent as the "PD Participant New York Transaction Documents",
(v) the Operator's Agreement and the Operator Consent as the "Operator
Transaction Documents", (vi) the PD Concentrate Sales Agreement and the PD
Cathodes Sales Agreement as the "PD Buyer Transaction Documents" and (vii) the
Completion Guarantee, the Transfer Restrictions Agreement and the Shareholder
Consent as the "BVN Transaction Documents."

     We have also examined and relied on such corporate documents and records of
the PD Parties [and BVN] and such other instruments and certificates of public
officials, officers and representatives of the PD Parties [and BVN] and other
Persons and such questions of law as we have deemed necessary or appropriate for
the purposes of this opinion. With respect to all Peruvian law matters that
relate to the Borrower and the Operator, we have, with your permission, assumed
the accuracy of and relied upon, respectively, the opinions of Estudio Rodrigo,
Elias & Medrano Abogados, special Peruvian counsel to the Borrower and the
opinions of Estudio Rodrigo, Elias & Medrano Abogados, special Peruvian counsel
to the Operator, and have made no other


                                       3



investigation of any corporate records, certificates or other documents relating
to either the Borrower or the Operator. [With respect to all Peruvian law
matters that relate to BVN, we have, with your permission, assumed the accuracy
of and relied upon the opinions of Estudio Aurelio Garcia Sayan Abogados,
special Peruvian counsel to BVN, and have made no other investigation of any
corporate records, certificates or other documents relating to BVN.]

     Based upon and subject to the foregoing and the assumptions, qualifications
and limitations hereinafter set forth, we are of the opinion that:

     1. (a) PDC is validly existing and in good standing under the laws of the
State of New York.

     (b) The PD Participant is validly existing and in good standing under the
laws of the State of Delaware.

     (c) The PD Buyer is validly existing and in good standing under the laws of
the State of Delaware.

     2. (a) PDC has the corporate power and authority to execute, deliver and
perform its obligations under the PD Transaction Documents.

     (a) The PD Participant has the corporate power and authority to execute,
deliver and perform its obligations under the PD Participant Transaction
Documents.

     (b) The PD Buyer has the corporate power and authority to execute, deliver
and perform its obligations under the PD Buyer Transaction Documents.

     3. (a) PDC has taken all necessary corporate action to authorize its
execution and delivery of and performance of its obligations under the PD
Transaction Documents.

     (b) The PD Participant has taken all necessary corporate action to
authorize its execution and delivery of and performance of its obligations under
the PD Participant Transaction Documents.

     (c) The PD Buyer has taken all necessary corporate action to authorize its
execution and delivery of and performance of its obligations under the PD Buyer
Transaction Documents.

     4. (a) Each of the Borrower Transaction Documents constitutes the valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms.

     (b) Each of the PD Transaction Documents constitutes the valid and binding
obligation of PDC, enforceable against PDC in accordance with its terms.


                                       4



     (c) Each of the PD Participant New York Transaction Documents constitutes
the valid and binding obligation of the PD Participant, enforceable against the
PD Participant in accordance with its terms.

     (d) Each of the Operator Transaction Documents constitutes the valid and
binding obligation of the Operator, enforceable against the Operator in
accordance with its terms.

     (e) Each of the PD Buyer Transaction Documents constitutes the valid and
binding obligation of the PD Buyer, enforceable against the PD Buyer in
accordance with its terms.

     (f) [Each of the BVN Transaction Documents constitutes the valid and
binding obligation of BVN, enforceable against BVN in accordance with its
terms.]

     5. The Master Security Agreement is effective to create a valid security
interest in favor of the Offshore Collateral Agent, for the benefit of the
Senior Facility Lenders, as security for the Senior Facility Loan Obligations in
all of the collateral described therein that is of the type in which a security
interest can be created under Article 9 (the "Article 9 Collateral") of the
Uniform Commercial Code of the State of New York as in effect on the date hereof
(the "UCC") to the extent the UCC is applicable to the creation of such security
interest.

                                      * * *

     In rendering the foregoing opinion, we have assumed that: (i) (a) the
Transaction Documents have been duly authorized, executed and delivered by the
respective parties thereto other than PDC, PD Participant and PD Buyer, (b) each
party to each Transaction Document has been duly organized and, other than PDC,
PD Participant and PD Buyer, is an existing legal entity in good standing under
the laws of its jurisdiction of organization and (c) each of the Transaction
Documents is in consideration for, or relates to, an obligation arising out of a
transaction covering in the aggregate not less than US$1,000,000 and (ii) all
copies of documents reviewed by us are in conformity with the originals thereof,
and that there have been no amendments to such originals, and that any
signatures thereon are genuine and affixed by persons with authority to do so.

     Our opinions set forth above are subject to the effects of (i) bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization and
moratorium laws and other similar laws relating to or affecting creditors'
rights or remedies generally, (ii) general equitable principles (whether
considered in a proceeding in equity or at law), (iii) concepts of good faith,
diligence, reasonableness and fair dealing, and standards of materiality, (iv)
limitations on the validity or enforceability of indemnification, contribution
or exculpation under applicable law (including court decisions) or public policy
and (v) possible judicial action giving effect to foreign laws or foreign


                                       5



governmental or judicial action affecting or relating to the rights or remedies
of creditors. In addition, applicable laws and interpretations may affect the
validity or enforceability of certain provisions of the Transaction Documents,
but such limitations do not, in our opinion, make the remedies provided for
therein inadequate for the practical realization of the principal benefits
intended to be provided thereby (subject to the other qualifications expressed
herein).

     We express no opinion as to (A) the perfection of any security interest
created under any of the Transaction Documents and (B) the creation, validity or
perfection of any security interest, or the validity, binding effect or
enforceability of any Transaction Document, to the extent that such Transaction
Document grants or purports to grant (i) a security interest (a) that is not
governed by the UCC (including but not limited to any such security interest
with respect to (X) copyrights, copyright licenses, patents, patent licenses,
trademarks and trademark licenses or (Y) insurance policies), (b) in commercial
tort claims, letter-of-credit rights, fixtures, cooperative interests, farm
products, as-extracted collateral or timber to be cut, (ii) in any property the
terms of or governing which void or prohibit, or are violated by, the granting
of such security interest or (iv) in any claim against the United States, (iii)
a mortgage or other interest in real property, or (c) an agricultural lien.

     Without limiting the foregoing, we express no opinion as to the validity,
binding effect or enforceability of any provision of any Transaction Document
that purports to (i) prohibit any Person from transferring its respective rights
in the collateral described in the Transaction Documents or any proceeds
thereof, as contemplated by Section 9-401 of the UCC, (ii) permit the Onshore
Collateral Agent or the Offshore Collateral Agent to vote or otherwise exercise
any rights with respect to any of the collateral under the Transaction Documents
absent compliance with the requirements of applicable laws and regulations as to
the voting of or other exercise of rights with respect to such collateral, (iii)
waive, release or vary any defense, right or privilege of, or any duties owing
to, any Person to the extent that such waiver, release or variation may be
limited by Section 1-102(3), 9-602 or 9-603 of the UCC or other provisions of
applicable law, (iv) grant a right to collect any amount that a court determines
to constitute post-judgment interest, or a penalty or forfeiture, (v) grant any
right of set-off with respect to any contingent or unmatured obligation, or to
permit any Person purchasing a participation from a Lender to exercise set-off
rights with respect to such participation, (vi) maintain or impose any
obligation to pay any amount in U.S. dollars where a final judgment concerning
such obligation is rendered in another currency, (vii) constitute a waiver of
inconvenient forum or improper venue, (viii) relate to the subject matter
jurisdiction of a court to adjudicate any controversy, (ix) provide for
liquidated damages or otherwise specify or limit damages, liabilities or
remedies, or (x) provide that the parties to any Transaction Document shall
engage in negotiations to replace any illegal, prohibited or unenforceable
provision. In addition, the enforceability of any provision in any Transaction
Document to the effect that (i) the terms thereof may not be waived or modified
except in writing,


                                       6



(ii) the express terms thereof supersede any inconsistent course of performance
or usage of trade or (iii) certain determinations made by one party shall have
conclusive effect, may be limited under certain circumstances. We wish to call
to your attention that the enforceability of waivers of immunity is subject to
the limitations imposed by the U.S. Foreign Sovereign Immunities Act of 1976, as
amended.

     Our opinions set forth in paragraph 5 above are limited to Articles 8 and 9
of the UCC and therefore do not address (i) laws of jurisdictions other than New
York, (ii) laws of New York other than Articles 8 and 9 of the UCC or (iii)
collateral of a type not subject to Article 9 of the UCC. We express no opinion
as to what law governs perfection of any security interest granted by the
Transaction Documents. We have assumed with your permission that (i) none of the
Secured Parties has waived, subordinated or agreed with any third party to any
modification of the perfection or priority of any security interest granted by
the Transaction Documents, (ii) the Borrower has sufficient rights in the
collateral described in the Transaction Documents for the security interests
granted thereby to attach. We express no opinion as to the title or any other
interest of the Borrower in or to any of the collateral described in the
Transaction Documents. No security interest will exist with respect to
after-acquired property of the Borrower until the Borrower has rights therein
within the meaning of Section 9-203 of the UCC.

     We express no opinion as to the validity, perfection or priority of such
security interests: (i) with respect to collateral sold, exchanged or otherwise
disposed of by the Borrower; (ii) to the extent such security interests may be
affected by (x) Section 552 of the United States Bankruptcy Code, under which a
bankruptcy court has discretion as to the extent to which post-petition proceeds
may be subject to a lien arising from a security agreement entered into by the
debtor before the commencement of the case, or (y) Section 547(b) of the United
States Bankruptcy Code, relating to the power to avoid a preference; (iii) with
respect to proceeds, to the extent of limitations under Section 9-315 of the UCC
on the perfection of a security interest in proceeds; (iv) as to any collateral
acquired by the party granting such security interest more than four months
after such party changes its name so as to make the relevant financing
statements seriously misleading, unless amendments to such financing statements
indicating the new name of such party are properly filed before the expiration
of such four months; (v) as to any collateral acquired by any Person following
any change in the jurisdiction of organization (within the meaning of Section
9-102(a)(50) of the UCC) of the Borrower unless a new financing statement is
properly filed in the applicable new jurisdiction within the time specified in
Section 9-316 of the UCC; (vi) as to any property subject to a statute,
regulation or treaty of the United States, whose requirements for a security
interest's obtaining priority over the rights of a lien creditor with respect to
such property preempt Section 9-310(a) of the UCC; (vii) as to any goods that
are an accession to, or commingled or processed with, other goods, to the extent
limited by Section 9-335 or 9-


                                       7



336 of the UCC; or (viii) as to goods of any kind, such as motor vehicles,
subject to certificate of title statutes.

     We call to your attention that (A) the UCC requires periodic filing of
continuation statements in order to maintain the effectiveness of financing
statements filed pursuant thereto, (B) Section 8-107 of the UCC may in certain
circumstances limit the rights of a secured party in respect of any unauthorized
endorsement with respect to certificated securities constituting collateral
under the Transaction Documents not registered in the name of or issued to the
Agent and not originally issued in bearer form, (C) under certain circumstances
Section 9-408 of the UCC limits the enforcement of security interests in
promissory notes, health-care-insurance receivables and general intangibles and
(D) the perfection of the security interests granted by the Transaction
Documents may be limited by (i) rights under Article 2 of the UCC of a seller of
goods as to which the debtor does not yet have possession, (ii) the right of
reservation of a seller of goods under Section 2-505 of the UCC, (iii) the right
of reclamation of a seller of goods on credit under Section 2-702 of the UCC,
(iv) rights of buyers and lessees in the ordinary course to take goods free of
such security interests to the extent provided in Sections 9-320 and 9-321 of
the UCC, (v) rights of licensees in the ordinary course of business to license
general intangibles free of such security interest to the extent provided in
Section 9-321 of the UCC and (vi) rights of a purchaser of chattel paper and
instruments to claim priority over such security interests to the extent
provided in Section 9-330 of the UCC.

     We express no opinion as to the priority of the security interests
purported to be created by the Transaction Documents. Without limiting the
foregoing, we express no opinion as to the priority of any security interest (i)
as against any claims or liens in favor of the United States or any state
thereof, or any federal or state agency, instrumentality or political
subdivision, including but not limited to liens for payment of federal, state or
local taxes that are given priority by operation of law, liens under Title IV of
the Employee Retirement Security Act of 1974, as amended, or claims arising
under 31 U.S.C. Section 3713, (ii) as against any rights of a person in
possession of proceeds consisting of money or "instruments" (as defined in
Section 9-102(a)(47) of the UCC), (iii) as against liens under Section 4-208 of
the UCC, relating to security interests of a collecting bank, (iv) as against
liens granted under Section 364(d) of the United States Bankruptcy Code,
relating to liens granted by a court after the commencement of a case or (v)
that has been perfected by "control" under Sections 8-106, 9-104, 9-105, 9-106
or 9-107 of the UCC, as against any other security interest in the same property
that has also been perfected by "control."

     Without limiting the foregoing, we express no opinion as to: (i) any
provisions in the Transaction Documents which are too vague to have a clear
remedy, such as obligations to consult, discuss, coordinate or negotiate with
respect to specified matters or any provisions in the Transaction Documents
which constitute an agreement to agree in the future; (ii) any provision in the
PD Offtake Agreements setting forth specifications


                                       8



for products, forecasting and sampling procedures, pricing formulae and any
other similar provisions, including any provision in the exhibits to such
agreements; and (iii) any provision for payment of damages to the extent such
provision would be considered void as a penalty or not reasonable in light of
the anticipated or actual harm caused by the breach, the difficulties of proof
of loss and the inconvenience or nonfeasibility of otherwise obtaining an
adequate remedy.

     We express no opinion as to the laws of any jurisdiction other than the
laws of the State of New York, the Delaware General Corporation Law and the
Federal laws of the United States of America, in each case that in our
experience are generally applicable to transactions of this type. In particular
(and without limiting the generality of the foregoing) we express no opinion as
to (a) the laws of any country (other than the Federal laws of the United States
of America), (b) the effect of such laws (whether limiting, prohibitive or
otherwise) on any of the rights or obligations of the Borrower or of any other
party to or beneficiary of any of the Transaction Documents, or (c) whether the
choice of the law of the State of New York as the governing law in any
Transaction Document would be given effect by any court or governmental
authority other than a New York State court. We have assumed, with your
permission, that the execution and delivery of each of the Transaction Documents
by each of the parties thereto and the performance of their respective
obligations thereunder will not be illegal or unenforceable or violate any
fundamental public policy under, and that no such party has entered therein with
the intent of avoiding or a view to violating, applicable law (other than the
laws of the State of New York and Federal laws of the United States of America).
In giving the foregoing opinion, we express no opinion as to the effect (if any)
of any law of any jurisdiction (except the State of New York) in which any
Lender is located that limits the rate of interest that such Lender may charge
or collect.

     The opinions expressed herein are solely for your benefit and, without our
prior consent, neither our opinions nor this opinion letter may be disclosed to
or relied upon by any other person.

     This opinion letter is limited to the matters stated and no opinion is
implied or may be inferred beyond the matters expressly stated herein. The
opinions expressed herein are rendered only as of the date hereof, and we assume
no responsibility to advise you of facts, circumstances, events or developments
which hereafter may be brought to our attention and which may alter, affect or
modify the opinions expressed herein.

     Very truly yours,


                                       9



Schedule I

                                   ADDRESSEES

Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW
Calyon
The Royal Bank of Scotland Plc
Scotia Capital
Mizuho Corporate Bank, Ltd.


                                       10



                                  Appendix I-3

                Form of Opinion of Estudio Luis Echecopar Garcia,
             Special Peruvian Counsel to the Senior Facility Lenders



                                                                    APPENDIX I-3

                     [FORM OF OPINION OF ESTUDIO ECHECOPAR]

                                                      Lima, [Closing Date], 2005

Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi
KfW
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
CALYON New York Branch, for itself and as Administrative Agent

          Re: Sociedad Minera Cerro Verde S.A.A.

Ladies and Gentlemen:

     This opinion is furnished to you pursuant to Section 5.01(g)(iii) of the
Master Participation Agreement dated as of September 30, 2005 (as amended from
time to time, the "Master Participation Agreement" or "MPA") among Sociedad
Minera Cerro Verde S.A.A., a sociedad anonima abierta listed on the Lima Stock
Exchange and organized under the laws of Peru (the "Borrower"), Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, The Royal Bank of Scotland plc, The Bank of Nova
Scotia, Mizuho Corporate Bank Ltd. and CALYON New York Branch, in its individual
capacity and as Administrative Agent for the Senior Facility Lenders. All
capitalized terms used but not defined herein have the respective meanings
assigned to such terms in Schedule Z of the Master Security Agreement as defined
in the MPA). For purposes of this opinion, the term "Obligor" shall mean,
collectively, the Borrower, the Parent Companies, the Shareholders and the
Operator.

     We have acted as special Peruvian counsel to the Senior Facility Lenders in
connection with the preparation, execution and delivery of, and the initial
Senior Facility Loans made under, the Master Participation Agreement and the
other Financing Documents to which the Borrower or any Senior Facility Lender is
a party.

     In rendering the opinions below, we have examined originals or copies
certified to our satisfaction of the following agreements and documents
(collectively, as amended, supplemented or modified, the "Transaction
Documents"):

          (a)  Master Participation Agreement;

          (b)  Master Security Agreement;



          (c)  Completion Guarantee;

          (d)  JBIC Loan Agreement;

          (e)  JBIC Loan Funding Agreement;

          (f)  JBIC Political Risk Guarantee;

          (g)  KfW Loan Agreement;

          (h)  Commercial Banks Loan Agreement;

          (i)  Transfer Restrictions Agreement;

          (j)  Each Promissory Note to which the Borrower is a party on the date
               hereof;

          (k)  Construction Agreement;

          (l)  Engineering Agreement;

          (m)  Operator's Agreement;

          (n)  Each of PDC Guarantee and the Parent Company Guarantee, dated as
               of September 30, 2005, between Phelps Dodge Corporation and the
               Borrower;

          (o)  SMM Concentrate Sales Agreement and Amendment No. 1 thereto dated
               as of [September 30, 2005];

          (p)  PD Concentrate Sales Agreement;

          (q)  PD Cathodes Sales Agreement;

          (r)  Power Supply Agreement (110 MW), dated December 31, 2004, between
               the Borrower and ElectroPeru S.A. ("Power Supply I Agreement");

          (s)  Power Supply Agreement (46 MW), dated December 31, 2004, between
               the Borrower and ElectroPeru S.A. ("Power Supply II Agreement");

          (t)  Power Supply Agreement, dated December 29, 2004, between the
               Borrower and Empresa de Generacion Electrica de Arequipa S.A.
               ("Power Supply III Agreement");


                                       2



          (u)  Port Services Agreement;

          (v)  Transportation Agreement (Contrato de Manipuleo, Carga y
               Transporte Bi-modal de Concentrado), dated as of June 11, 2005,
               between the Borrower and Peru Rail S.A. (the "Peru Rail
               Agreement");

          (w)  Transportation Agreement (Contrato de Servicios de Transporte de
               Catodos de Cobre, Mercaderias y Acido Sulfurico), dated as of
               June 2, 2003, between the Borrower and Transaltisa S.A. (as
               amended pursuant to the Primera Clausula Adicional al Contrato de
               Servicios de Transporte, dated as of August 6, 2004, by and
               between the Borrower and Transaltisa S.A.) (the "Transaltisa
               Agreement");

          (x)  each of the following Onshore Security Documents:

               (i)  Mining Mortgage (hipoteca minera) over all Core Mining
                    Concessions and the mining concessions identified as Tiabaya
                    4 and Tiabaya 10 (the "Material Concessions"), owned or to
                    be owned by the Borrower;

               (ii) Mining Pledge (prenda minera) of all equipment, machinery
                    and movable assets owned or to be owned by the Borrower in
                    accordance with Section 3.01 of the Master Security
                    Agreement;

               (iii) Floating Mining Pledge (prenda minera flotante) of (x) all
                    minerals extracted from the Core Mining Concessions and (y)
                    all Cathode and Concentrate in inventory extracted from the
                    Core Mining Concessions;

               (iv) Master Conditional Assignment of Rights (cesion condicionada
                    de derechos) of all of the Borrower's credit rights under
                    the Domestic Sales Agreements;

               (v)  Contrato de Cuenta Escrow among Banco de Credito del Peru,
                    as escrow agent, the Borrower and the Onshore Collateral
                    Agent;

               (vi) Contrato de Cuenta Escrow among Citibank del Peru S.A., as
                    escrow agent, the Borrower and the Onshore Collateral Agent;


                                       3



               (vii) Share Pledge Agreement;

               (viii) The form of Industrial Pledge (prenda industrial) of all
                    non-mining equipment, machinery and movable non-mining
                    assets (if any) to be owned by the Borrower in accordance
                    with Section 3.09(b)(ii) of the Master Security Agreement;
                    and

               (ix) The form of Real Estate Mortgage (hipoteca civil) of all
                    non-mining real estate (if any) to be owned by the Borrower
                    in accordance with Section 3.09(b)(i) of the Master Security
                    Agreement.

          (y)  the Consents to Assignment for each of the following documents:

               (i)  Power Supply I Agreement;

               (ii) Power Supply II Agreement;

               (iii) Power Supply III Agreement;

               (iv) Peru Rail Agreement;

               (v)  Transaltisa Agreement;

               (vi) Port Services Agreement;

               (vii) Operator's Agreement;

               (viii) Construction Agreements; and

               (ix) Shareholders Agreement.

          The agreements and documents referred to in clauses (a) through (q),
          are referred to herein collectively as the "U.S. Transaction
          Documents". The agreements and documents referred to in clauses (r)
          through (y), are referred to herein collectively as the "Peruvian
          Transaction Documents". The agreements and documents referred to in
          clauses (k) and (l) are referred to herein collectively as the
          "Arizona Transaction Documents".

     In addition, we have examined such certificates of officers of the
Obligors, certificates and records of governmental officials, corporate records
and other documents, approvals and such questions of law as we have considered
necessary or appropriate for the purposes of this opinion.


                                       4



     In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic original documents of all documents submitted to us as copies.
When relevant facts were not independently established, we have relied upon
certificates of governmental officials and appropriate representatives of the
Obligors, and upon representations made in or pursuant to the Transaction
Documents.

     In rendering the opinions expressed below, we have assumed (without
investigation on our part), with respect to all of the documents referred to in
this opinion letter, that, except to the extent set forth in the opinions
expressed below, as to all parties except the Borrower:

          (a)  such documents have been duly authorized by, and, except as to
               the Obligors, have been duly executed and delivered by, and
               constitute legal, valid, binding and enforceable obligations of,
               all of the parties to such documents;

          (b)  all signatories to such documents have been duly authorized; and

          (c)  all of the parties to such documents are duly organized and
               validly existing and have the power and authority (corporate,
               partnership or other) to execute, deliver and perform such
               documents.

     Based upon and subject to the foregoing and to the comments and
qualifications set forth below, and having considered such questions of law as
we have deemed necessary as a basis for the opinions expressed below, we are of
the opinion that:

     1. The Borrower is a sociedad anonima abierta listed on the Lima Stock
Exchange, duly incorporated and validly existing under the laws of the Republic
of Peru. The Borrower has all requisite power to own its property and to carry
on the Business to the extent and as contemplated by the Transaction Documents.

     2. The Borrower has full power and authority to enter into each of the
Transaction Documents in which it is named a party, and has full power and
authority to incur the obligations, to grant to the Senior Facility Lenders, the
Administrative Agent and the Collateral Agents, as security for the Senior
Facility Loans Obligations, the security interests in the Collateral purported
to be granted by it in or pursuant to the Master Security Agreement and the
Onshore Security Documents and to incur and perform the obligations provided for
in the Transaction Documents in which it is named as a party.

     3. Each Transaction Document in which the Borrower has been named as a
party has been duly executed and delivered by the Borrower, and constitutes the
legal


                                       5



valid and binding obligation of the Borrower, enforceable against the Borrower
in accordance with the terms therein.

     4. Each Transaction Document to which the Borrower is named as a party has
been duly authorized by all requisite action (including by resolution of the
Board of Directors [and Shareholders' Meeting] of the Borrower adopted on [ ]).
Each Peruvian Transaction Document constitutes the legal, valid and binding
obligation of the Obligor party thereto, enforceable against such Obligor in
accordance with its terms, except (i) that Peruvian courts will disregard the
waiver of protest and (ii) as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors generally. Each promissory
note when duly executed and delivered by the Borrower for value in the form
annexed to the applicable Senior Facility Loan Agreement, will constitute the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or transfer or
other similar laws relating to or affecting the rights of creditors generally.

     5. The choice of the law of the State of New York to govern the
interpretation of each New York Transaction Document or the law of the State of
Arizona to govern the interpretation of each Arizona Transaction Document would
be upheld as a valid choice of law in any action on the document brought to the
courts of Peru, except where the application of said laws are incompatible with
international public order or good customs.

     6. (a) All authorizations, approvals and consents from, and registrations,
filings and recordations by or with, governmental authorities in Peru or any
political subdivision thereof which are necessary for:

          (i)  the execution, delivery and performance by the Borrower of each
               of the Financing Documents to which it is a party, the incurrence
               by the Borrower of the Senior Facility Loans Obligations, (ii)
               the payment by the Borrower when due (whether at stated maturity,
               by acceleration or otherwise) of the Senior Facility Loans
               Obligations, (iii) the granting by the Borrower to the Secured
               Parties, the Administrative Agent or the Collateral Agents, as
               the case may be, of the security interests in the Collateral
               purported to be granted by or pursuant to the Master Security
               Agreement and the Onshore Security Documents and (iv) the
               performance by the Borrower of its other obligations under the
               Financing Documents, and

          (ii) the execution, delivery and performance by each Obligor, other
               than the Borrower, of each of the Peruvian Transaction Documents
               to which it is a party,


                                       6



have been obtained or made and are in full force and effect.

     (b) With respect to the Master Participation Agreement and the other
Financing Documents, no registration or approval of the financial terms of the
Senior Facility Loans Obligations to be incurred thereunder is required and no
action in Peru is required in respect of the ability of the Borrower to obtain
Dollars when and as necessary to pay the Senior Facility Loans Obligations when
due or the creation and maintenance of the Collateral as contemplated by the
Master Security Agreement and the Onshore Security Documents.

     (c) All filings, registrations and recordations by or with governmental
authorities in Peru or any political subdivision thereof that are necessary or
advisable with respect to (i) the validity or enforceability in Peru of the
obligations of the Borrower or the rights and remedies of any Senior Facility
Lender, under any of the Peruvian Transaction Documents to which they are party,
or (ii) the admissibility in evidence in a court in Peru of any of the
Transaction Documents, have been made.

     (d) Directorial Resolution No. 438-2004 dated September 27, 2004 which
approves the Enviromental Impact Study; Directorial Resolution No. 1027-2004
dated October 26, 2004 which approves the Beneficiation Concession Expansion and
Construction; and Supreme Decree No. 003-2004-AG dated January 28, 2004 that
reserves water rights in favor of the Borrower are in full force and effect.

     7. No income, stamp or other taxes or levies, imposts, deductions, charges,
compulsory loans or withholdings whatsoever are or will be, under applicable law
in Peru currently in effect, imposed, assessed or levied upon or collected from
the Borrower by Peru or any political subdivision or taxing authority thereof or
therein or on or in respect of the Financing Documents, the Senior Loans made
thereunder or the Promissory Notes or any payments of principal, interest or
commissions under any thereof, except for (a) the 4.99% withholding tax
currently imposed by Peruvian tax legislation which 4.99% withholding tax rate
will be applied so long as (i) the interest rate borne by the Senior Loans does
not exceed Libor plus 7% or Prime plus 6%, (ii) there is no economic linkage
between the Borrower and the Senior Lender to whom such interest is paid and
(iii) the proceeds, if in cash, of the Senior Loans are received in Peru by the
Borrower and (b) the 19% VAT imposed on interest paid to non-banking or
non-financial or non-credit institutions. Any portion of the interest rates
applying to the Senior Loans that exceed the rates specified in clause (i) above
will be subject to taxation at a 30% withholding tax rate. If the conditions
specified in clauses (ii) or (iii) above are not satisfied, interest on the
relevant Senior Loans will be subject to taxation at a 30% withholding tax rate.
For this purpose, all expenses and commissions, premiums and any other sum
payable in addition to interest agreed upon, paid to the foreign beneficiary,
will also be considered as interest.


                                       7



     8. The execution and delivery by the Borrower of, the performance and
incurrence by the Borrower of its obligations and liabilities under, and the
consummation by the Borrower of the other relevant transactions contemplated by
the Transaction Documents to which the Borrower is a party, do not and will not
(a) violate any provision of the charter or by-laws of the Borrower, (b) violate
any provision of the Peruvian Corporation Law, (c) violate or conflict with any
and applicable treaty, law, rule or regulation of Peru or any political
subdivision thereof, (d) violate any order, writ, injunction or decree of any
court or governmental or regulatory authority or agency or any arbitral award
applicable to the Borrower of which we have knowledge (after due inquiry) or (e)
result in a breach of, constitute a default under, require any consent under, or
result in the acceleration or required prepayment of any indebtedness pursuant
to the terms of, any agreement or instrument, of which we have knowledge (after
due inquiry) to which the Borrower is a party or by which the Borrower is bound
or to which it is subject, or (except for the Permitted Liens created pursuant
to the Master Participation Agreement and the Onshore Security Documents) result
in the creation or imposition of any lien upon any property of the Borrower
pursuant to the terms of any such agreement or instrument.

     9. The execution and delivery by the Operator, each Parent Company and each
Shareholder of, the performance and incurrence by such Obligor of its
obligations and liabilities under, and the consummation by such Obligor of the
other transactions contemplated by the Peruvian Transaction Documents to which
such Obligor is a party do not and will not violate any applicable treaty, law,
rule or regulation of Peru or any political subdivision thereof.

     10. To our knowledge (after due inquiry), (a) there are no actions, suits
or legal or arbitral proceeding, or any proceedings or investigation, at law or
equity, by or before any Peruvian governmental or regulatory authority or
agency, now pending, or threatened against or affecting the Borrower or any of
its properties, or any existing default by the Borrower under any applicable
order, writ, injunction or decree of any Peruvian governmental or regulatory
authority to be applicable to the Borrower, other than as disclosed in writing
to the Senior Facility Lenders on or prior to the date hereof and (b) there are
no competing existing claims to the Material Concessions reported in El Peruano
within the twelve month period immediately preceding the date of this Opinion or
registered in the Book of Mining Rights of the Public Records Office.

     11. The SMCV Shares comprise all of the issued and outstanding shares of
capital stock of the Borrower held by or on behalf of the Shareholders as of the
date hereof and consist of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock held as follows: [DESCRIBE TYPE & NUMBER
OF SHARES FOR EACH SHAREHOLDER.] The SMCV Shares have been duly and validly
issued and are fully paid and non assessable and are duly registered in CAVALI
ICLV S.A. and/or the share registry of the Borrower, as applicable, in the name
of the Shareholders.


                                       8



     12. (a) The Borrower has good and valid title to the real and personal
property and water rights informed by the Borrower to be owned by it. There are
no liens, security interests, charges or encumbrances of any nature registered
in the relevant registry, and to the best of our knowledge (after due inquiry)
no averse or competing claims, against said properties of the Borrower except
Permitted Liens and any action, suit or proceeding referred to in paragraph 10
hereinabove.

     (b) Each of the Material Concessions is validly granted to and owned by the
Borrower, is duly registered in the name of the Borrower, and is subject to no
defects, irregularities, easements, restrictions on use, liens or encumbrances
(other than Permitted Liens created pursuant to the Master Participation
Agreement and the Onshore Security Documents) or rights of others. Currently, no
Person other than the Borrower and the Onshore Collateral Agent has any right,
title or interest, in, to or under the Material Concessions.

     13. The obligations of the Borrower to the Senior Lenders under the Master
Participation Agreement, Promissory Notes and other Transaction Documents will
at all times rank in right of payment (a) pari passu with or senior to all other
obligations of the Borrower, except for claims in Peru for employee benefits and
social security contributions and (b) senior to the obligations of the Borrower
in respect of the Subordinated Loans. No Person holding indebtedness of the
Borrower may obtain a preference or priority over the obligations of the
Borrower under the Transaction Documents solely by reason of the agreements or
instruments evidencing such indebtedness being executed before a notary or any
other Person.

     14. Each of the Onshore Security Documents to which the Borrower is a party
purported to create a garantia real pursuant to the laws of Peru creates in Peru
a valid and fully perfected first and prior security interest in and lien upon
the properties, rights and revenues purported to be covered thereby as security
for the Senior Loans Obligations, subject to no other equal or prior mortgages,
pledges, liens, security interests, rights of reversion, assignments or other
encumbrances or rights of others whatsoever, enforceable in Peru against the
Borrower and except for claims in Peru for employee benefits and social security
contributions against any trustee, receiver or intervenor in bankruptcy, any
attaching creditor and all other third parties, in accordance with its terms;
and no further authorization, registration, filing, notarization, recordation or
other formality in Peru is required to be obtained or accomplished, and no fee,
duty or tax is required to be paid, for the maintenance, preservation and
continued perfection and priority of such security interests and liens.

     15. The Share Pledge Agreement in respect of SMCV Shares creates in Peru a
valid and fully perfected first rank security interest in and lien upon the SMCV
Shares as security for the Senior Facility Loans Obligations, subject to no
other equal or prior mortgages, pledges, liens, security interests, rights of
reversion, assignments or other encumbrances or rights of others whatsoever,
enforceable in Peru against the Shareholder


                                       9



party thereto and against any trustee, receiver or intervenor in bankruptcy, any
attaching creditor and all other third parties, in accordance with its terms;
and no further authorization, registration, filing, notarization, recordation or
other formality in Peru is required to be obtained or accomplished, and no fee,
duty or tax is required to be paid, for the maintenance, preservation and
continued perfection and priority of such security interests and liens.

     16. The Borrower is subject to civil and commercial law with respect to its
obligations under each of the Transaction Documents, and the making and
performance by it of such Transaction Documents constitute private and
commercial acts, rather than governmental or public acts. Neither of the
Borrower nor any Obligor nor any of their respective assets, properties or
revenues, has in Peru any immunity from jurisdiction of any court or from any
legal process in Peru (whether through service, notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise).

     17. Each of the Transaction Documents is in proper legal form for the
effectiveness and enforcement thereof in the courts of Peru, except that an
official translation to Spanish of each Transaction Document which is not
executed in the Spanish language would be required for purposes of enforcement
proceedings in Peru.

     18. (a) The submission by the Borrower to the non-exclusive jurisdiction of
any Federal or State Court located in the Borough of Manhattan, The City of New
York, with respect to matters arising under or in connection with any
Transaction Document (other than the Peruvian Transaction Documents) is valid
and effective under the laws of Peru. The submission by the Borrower to the
non-exclusive jurisdiction of any court located in the City of Phoenix, State of
Arizona with respect to matters arising under or in connection with any
Transaction Documents (other than the New York Transaction Document and the
Peruvian Transaction Documents) is valid and effective under the laws of Peru.

     (b) The Borrower is generally subject to suit in Peru, and its submission
to the non-exclusive jurisdiction of the courts of the city of Lima, Peru, with
respect to matters arising under or in connection with any Transaction Document,
is valid and effective.

     (c) A final judgment against the Borrower for the payment of money obtained
in any such court in the State of New York pursuant to service of process on an
agent of the Borrower in the manner specified in the Master Participation
Agreement (other than the Onshore Security Documents) providing for such service
of process would be recognized, conclusive and enforceable in the courts of Peru
without reconsideration on the merits provided that: (i) there is in effect a
treaty between the country where said foreign court sits and the Republic of
Peru regarding the recognition and enforcement of foreign judgments or, in the
absence of such treaty and (ii) the following requirements are met:


                                       10



               (A)  the judgment does not resolve matters under the exclusive
                    jurisdiction of Peruvian courts;

               (B)  such court had jurisdiction under its own conflicts of law
                    rules and under general principles of international
                    procedural jurisdiction;

               (C)  the defendant was served in accordance with the laws of the
                    place where the procedure took place, was granted a
                    reasonable opportunity to appear before such foreign court,
                    and was guaranteed due process rights;

               (D)  the judgment has the status of res judicata in the
                    jurisdiction of the court rendering such judgment;

               (E)  there is no pending litigation in Peru between the same
                    parties for the same dispute, which shall have been
                    initiated before the commencement of the proceeding that
                    concluded with the foreign judgment;

               (F)  the judgment is not incompatible with another judgment which
                    fulfills the requirements of recognition and enforceability
                    established by Peruvian law which was rendered first;

               (G)  the judgment is not contrary to public order or good morals;
                    and

               (H)  it is not proven that such foreign court denies enforcement
                    of Peruvian judgments or engages in a review of the merits
                    thereof.

     We have no reason to believe that any obligation under the Transaction
Documents would be contrary to Peruvian public policy and international treaties
binding upon Peru or generally accepted principles of international law.

     Assuming such a foreign final judgment complied with the standards set
forth in this paragraph 18(c), and in the absence of any condition referred to
above which would render a foreign judgment unenforceable, the Secured Parties
would be entitled to enforce such judgment in Peru by proceedings for the
enforcement of a foreign final judgment under the laws of Peru.

     19. The subordination terms set out in Exhibit A to the Completion
Guarantee are enforceable in Peru.


                                       11



     20. Under the law of Peru, a foreign corporation is not required solely as
a lender holding Indebtedness, or liens under any security agreement covering
personal property, to procure a certificate of authority to transact business or
otherwise qualify to do business in Peru. As such, none of the Secured Parties
nor the Administrative Agent, solely by reason of the making of the extensions
of credit contemplated by the Financing Documents or the execution and delivery
by the Borrower or the Obligors of the Financing Documents, will (a) be required
to qualify to do business in Peru or to comply with the requirements of any
foreign registration or qualification law of Peru, (b) be subject to taxation by
Peru or any political subdivision of Peru or (c) be required, preceding
enforcement of the Financing Documents, to make any filing with any court or
other judicial or administrative body in or of Peru in order to carry out any of
the transactions contemplated by the Financing Documents.

     21. Pursuant to Legislative Resolution No. 24810, Peru has ratified, and
has enacted all legislation necessary under the laws of Peru to implement the
Convention on the Recognition and Enforcement of Foreign Arbitral, adopted in
June 10th, 1958 in New York. We are not aware of any public policy of Peru that
would prevent the recognition and enforcement of any arbitral award rendered
pursuant to the Master Participation Agreement, Master Security Agreement or any
other Financing Document. The arbitration provisions in Section 12.17 of the
Master Participation Agreement and Section 9.16 of the Completion Guarantee are
valid and binding to refer any dispute contemplated thereunder to arbitration,
pursuant to and in accordance with the terms and conditions set forth in such
Sections.

     22. The Senior Facility Lenders are not and will not be deemed resident,
carrying on business, subject to taxation as such or subject to environmental
liability in Peru solely by reason of the making of the Senior Facility Loans or
enforcement in Peru of any of the Transaction Documents to which they are a
party.

     23. There are no restrictions or requirements which limit the availability
or transfer of foreign currency for the purpose of the performance by the
Borrower of its obligations under the Transaction Documents.

     24. Under the laws of Peru, the perfection of non-possessory security
interests over the Proceeds Account or the rights of the Borrower under the SMM
Concentrate Sales Agreement, the PD Concentrate Sales Agreement, the PD Cathode
Sales Agreement, the Construction Agreements, the Operator's Agreement and the
Shareholders Agreement, do not require filing, recording or registration as a
condition or result of such security interest being created.

     The foregoing opinions are limited to matters involving the laws of Peru
and we do not express any opinion as to the laws of any other jurisdiction.
Unless otherwise indicated, our opinions are based upon the facts in existence
and the laws in effect as of the date hereof and we disclaim any obligation to
update our opinions with respect to any


                                       12



changes in such facts or laws that may come to our attention after delivery of
this opinion.

     At the request of our clients, this opinion letter is provided to you by us
in our capacity as counsel to the Senior Facility Lenders, and this opinion
letter may not be relied upon by any Person for any purpose other than in
connection with the transactions contemplated by the Transaction Documents
without, in each instance, our prior written consent.

                                        Very truly yours,


                                       13



                                  Appendix I-4

             Form of Opinion of Milbank, Tweed, Hadley & McCloy LLP



                                                                    APPENDIX I-4

            [Form of opinion of Milbank, Tweed, Hadley & McCloy LLP]

                                                              [__________], 2005

Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
CALYON New York Branch, in its own capacity and as Administrative Agent

Re: Sociedad Minera Cerro Verde S.A.A.

Ladies and Gentlemen:

          We have acted as special New York counsel to Japan Bank for
International Cooperation ("JBIC"), Sumitomo Mitsui Banking Corporation ("SMBC")
in its own capacity and as JBIC Agent, The Bank of Tokyo-Mitsubishi, Ltd.
("BOT-M"), KfW, The Royal Bank of Scotland plc ("RBS"), The Bank of Nova Scotia
("Scotia Capital"), Mizuho Corporate Bank, Ltd. ("Mizuho") and CALYON New York
Branch ("Calyon"), in it own capacity and as Administrative Agent (in such
capacity, the "Administrative Agent"), in connection with the execution and
delivery of Master Participation Agreement dated as of September 30, 2005 (the
"Master Participation Agreement" ) among Sociedad Minera Cerro Verde S.A.A., a
sociedad anonima abierta organized under the laws of Peru (the "Borrower"),
JBIC, SMBC, BOT-M, KfW, Calyon in its own capacity and as Administrative Agent,
RBS, Scotia Capital and Mizuho. Capitalized terms used and not otherwise defined
herein have the meanings given to them in Schedule Z to the Master Security
Agreement (as defined in the Master Participation Agreement). As used herein,
"UCC" means the Uniform Commercial Code as in effect in the State of New York.

          In rendering the opinions expressed below, we have examined the
following agreements and documents (collectively referred to as the "New York
Documents"):

          (i)  the Master Participation Agreement;

          (ii) the Master Security Agreement;

          (iii) the Completion Guarantee;



          (iv) the Transfer Restrictions Agreement;

          (v)  the KfW Loan Agreement; and

          (vi) the Commercial Banks Loan Agreement.

          We have assumed for purposes of our opinions hereinafter set forth
that the New York Documents have been duly authorized, executed and delivered
by, and (except to the extent set forth below as to the Borrower, SMM, SC, the
Sumitomo Participant, BVN, PDC and CCMC) constitute the legal, valid, binding
and enforceable obligations of, the respective parties thereto; that each of the
respective parties thereto is duly organized and validly existing under the laws
of the jurisdiction of its organization and has full power, authority and legal
right to make and perform each New York Document to which it is a party, and
that all authorizations, approvals or consents of (including without limitation
all foreign exchange control approvals), and all filings or registrations with,
any governmental or regulatory authority or agency required for the making and
performance of each of the New York Documents by the respective parties thereto
have been obtained or made and are in effect; and that the making and
performance of each of the New York Documents by the respective parties thereto
do not, in the case of any such party, contravene, and such agreements are not
invalid or unenforceable under, the law of the jurisdiction (other than the
State of New York) of organization of such party.

          In rendering the opinions expressed below, we have examined such
documents and papers as we have deemed necessary as a basis for the opinions
hereinafter expressed. In such examination we have assumed the genuineness of
all signatures, the authenticity of documents submitted to us as originals and
the conformity with the authentic original documents of all documents submitted
to us as copies. With respect to certain matters of fact, we have relied upon
representations of the parties to the New York Documents, including, without
limitation, the representations set forth in the New York Documents.

          Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:

          1. The Master Participation Agreement constitutes the valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and to the possible judicial
application of foreign laws or governmental action affecting the rights of
creditors generally, and except as the enforceability of the Master


                                       2



Participation Agreement is subject to the application of general principles of
equity (regardless of whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (ii) concepts
of materiality, reasonableness, good faith and fair dealing.

          2. The Master Security Agreement constitutes the valid and binding
obligation of the Borrower, enforceable in accordance with its terms, except as
may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance
or transfer, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and to the possible judicial application of
foreign laws or governmental action affecting the rights of creditors generally,
and except as the enforceability of the Master Security Agreement is subject to
the application of general principles of equity (regardless of whether
considered in a proceeding in equity or at law), including without limitation
(i) the possible unavailability of specific performance, injunctive relief or
any other equitable remedy and (ii) concepts of materiality, reasonableness,
good faith and fair dealing.

          3. Each of the KfW Loan Agreement and Commercial Banks Loan Agreement
constitutes the valid and binding obligation of the Borrower, enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or other similar
laws relating to or affecting the rights of creditors generally, and to the
possible judicial application of foreign laws or governmental action affecting
the rights of creditors generally, and except as the enforceability of each of
such agreements is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (ii) concepts
of materiality, reasonableness, good faith and fair dealing.

          4. The Completion Guarantee constitutes the valid and binding
obligation of each of SMM, SC, BVN and PDC, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance or transfer, moratorium or other similar laws relating to
or affecting the rights of creditors generally, and to the possible judicial
application of foreign laws or governmental action affecting the rights of
creditors generally, and except as the enforceability of the Completion
Guarantee is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including without limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (ii) concepts
of materiality, reasonableness, good faith and fair dealing.

          5. The Transfer Restrictions Agreement constitutes the valid and
binding obligation of each of the SMM Participant, BVN, CCMC, SMM, SC and PDC,


                                       3



enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and to the possible judicial application of foreign laws or
governmental action affecting the rights of creditors generally, and except as
the enforceability of the Transfer Restrictions Agreement is subject to the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law), including without limitation (i) the possible
unavailability of specific performance, injunctive relief or any other equitable
remedy and (ii) concepts of materiality, reasonableness, good faith and fair
dealing.

          6. The Master Security Agreement is effective to create in favor of
the Offshore Collateral Agent for the benefit of the Secured Parties, as
security for the Secured Obligations, valid security interests (to the extent
the UCC is applicable thereto) in the right, title and interest of the Borrower
(a) in, to and under the SMM Concentrate Sales Agreement, the PD Concentrate
Sales Agreement and the PD Cathodes Sales Agreement, (b) in the Proceeds
Account, (c) in and to each of the Construction Agreements, the Operator's
Agreement and the Shareholders Agreement. We note that (i) that such security
interest will continue in such collateral after disposition thereof and in any
proceeds (as defined in Section 9-102(a)(64) of the UCC) thereof only to the
extent provided in Section 9-315 of the UCC and (ii) in the case of property
which becomes collateral after the date hereof, the security interests therein
referred to above will not attach or be enforceable until such time as the
debtor or other grantor has rights in such property, and Section 552 of the
Federal Bankruptcy Code limits the extent to which property acquired by a debtor
or other grantor after the commencement of a case under the Federal Bankruptcy
Code may be subject to a security interest arising from a security agreement
entered into by the debtor or other grantor before the commencement of such
case. We express no opinion herein as to whether the Borrower has any right,
title or interest in or to any of the properties or rights in which security
interests are, or are purported to be, granted by the Master Security Agreement,
or as to the perfection of any such security interest (except expressly set
forth in paragraph 7 below) or as to the priority of any such security interest.

          7. The security interest created by the Master Security Agreement in
the Borrower's right, title and interest, if any, in and to the Proceeds Account
is perfected by execution and delivery of the Master Security Agreement by the
parties thereto. As to security interests referred to in paragraph 6 hereof
created by the Master Security Agreement that are not so perfected, (a) if Peru
constitutes a filing jurisdiction as hereinafter defined (as to which we express
no opinion), and the Borrower's place of business or (if it has more than one
place of business) chief executive office is in Peru, under Section 9-301 of the
UCC the local law of Peru governs perfection, the effect of perfection or
non-perfection and the priority of such security interest, and (b) if Peru does
not constitute such a filing jurisdiction, (i) the Borrower will be deemed to be
located in


                                       4



the District of Columbia for purposes of Article 9 of the UCC, (ii) under
Section 9-301 of the UCC the local law of the District of Columbia governs
perfection, the effect of perfection or non-perfection and the priority of the
security interest created in the Borrower's rights, title and interest in and to
the collateral described by the Master Security Agreement and (iii) pursuant to
Section 9-501 of the Uniform Commercial Code as in effect in the District of
Columbia, the filing of an appropriate financing statement in the Recorder of
Deeds of the District of Columbia will cause such security interests to be
perfected. As used herein, "filing jurisdiction" means a jurisdiction whose law
generally requires information concerning the existence of a non-possessory
security interest to be made generally available in a filing, recording or
registration system as a condition or result of the security interest's taking
priority over the rights of a lien creditor (as defined in Section 9-102(a)(52)
of the UCC) with respect to the collateral referred to in paragraph 6 hereof.

          Our opinions in paragraphs 2 and 6 above are subject to possible
limitations on the exercise of remedial or procedural provisions contained in
the Master Security Agreement, but such limitations do not, in our opinion (but
subject to the other comments and qualifications set forth in this opinion
letter), make the remedies and procedures that would be afforded to the Offshore
Collateral Agent or the Secured Parties inadequate for the practical realization
of the benefits intended to be provided by the Master Security Agreement. We
further point out that provisions of the New York Documents which permit the
Offshore Collateral Agent, the Secured Parties or a Senior Facility Lender to
take actions or make determinations or require payments under indemnity and
similar provisions may be subject to a requirement that such actions be taken
and such determinations be made on a reasonable basis and in good faith and may
be limited by laws limiting the enforceability of provisions exculpating or
exempting a party from, or requiring indemnification of a party for, liability
for its own action or inaction, to the extent such action or inaction involves
gross negligence, recklessness or willful or unlawful conduct.

          The foregoing opinions are also subject to the following comments and
qualifications:

               (a) We express no opinion as to (i) the provisions of Section
     12.16(a) of the Master Participation Agreement, and similar provisions of
     any of the other New York Documents, to the extent such provisions relate
     to the subject matter jurisdiction of United States Federal courts to
     adjudicate any matter under or arising out of or in connection with the New
     York Documents or Senior Facility Loans Obligations or to a waiver of
     inconvenient forum with respect to proceedings in any United States Federal
     Court located in New York County in the City of New York; (ii) Section
     10.04(b) of the Master Participation Agreement, and similar provisions of
     any of the other New York Documents; (iii) the provisions of Section 12.24
     of the Master Participation Agreement, and similar provisions of any of the
     other New York Documents, to the extent such


                                       5



     provisions relate to immunity acquired after the date of the execution and
     delivery of the New York Documents; or (iv) the enforceability of
     provisions of the New York Documents which prohibit transfers of rights in
     property subject to a security interest thereunder.

               (b) We express no opinion as to (i) the enforceability of any
     provision of a New York Document calling for payments to be made without
     set-off or counterclaim for any reason whatsoever; (ii) Section 13.08 of
     the KfW Loan Agreement and Section 11.11 of the Commercial Banks Loan
     Agreement; or (iii) any promissory note provided for in any Senior Facility
     Loan Agreement.

               (c) We express no opinion as to the creation or perfection of any
     security interest in any portion of the Collateral to the extent that,
     pursuant to Section 9-109(c) or (d) of the UCC, Article 9 of the UCC does
     not apply thereto.

               (d) We express no opinion as to the enforceability of provisions
     in the New York Documents to the effect that terms may not be waived or
     modified except in writing may be limited under certain circumstances.

               (e) We express no opinion with respect to the effect of the laws
     of any jurisdiction in which any Senior Facility Lender is located (other
     than New York) that limits the interest, fees or other charges it may
     impose for the loan or use of money or other credit.

               (f) For purposes of paragraph 7 above, we assume that each
     endorsement, instruction and entitlement order, as such terms are defined
     in Section 8-102(a) of the UCC, is effective in accordance with Section
     8-107 of the UCC; we express no opinion as to the effect of any rule
     adopted by any clearing corporation, as defined in Section 8-102(a) of the
     UCC, governing rights and obligations among such clearing corporation and
     its participants; our opinion with respect to any security entitlement is
     subject to Part 5 of Article 8 of the UCC; and we express no opinion as to
     the creation, perfection or priority of any security interest in any
     obligations of the Government of the United States or any agency or
     instrumentality thereof except for obligations subject to the Revised
     Book-Entry Rules as defined in Annex 1 hereto.

          With respect to our opinion in paragraphs 1 through 6 above, we note
that under Section 12.17 of the Master Participation Agreement, and under
provisions of the Completion Guarantee, certain particular disputes arising
thereunder are to be settled by arbitration. Although there can be no assurance
that the arbitrators will apply principles of New York law in resolving any such
dispute or in rendering any award and, if they do not, the failure to apply
principles of New York law will not be a basis for a court vacating such award,
we have, with your permission, nevertheless assumed in rendering


                                       6



our opinions above that the arbitrators will properly apply principles of New
York law in arriving at their award.

          We wish to point out that the acquisition by the Borrower after the
initial extension of credit under the New York Documents of an interest in
property that becomes subject to the lien of the Master Security Agreement may
constitute a voidable preference under Section 547 of the Bankruptcy Code.

          This opinion is provided to you by us as special New York counsel to
the addressees noted above pursuant to Section 5.01(g)(iv) of the Master
Participation Agreement and may not be relied upon by any other person or for
any purpose other than in connection with the transactions contemplated by the
New York Documents without, in each instance, our prior written consent.

          We are members of the bar of the State of New York and we do not
herein express any opinion as to any matters governed by any laws other than the
laws of the State of New York, the federal laws of the United States, and for
purposes of paragraph 7(iii) above, the Uniform Commercial Code as in effect in
the District of Columbia, and we do not express any opinion as to the law of any
other jurisdiction. Without limiting the foregoing, we do not hold ourselves out
as experts on, or purport to advise on, the laws of Peru.

                                        Very truly yours,



RSB/JJG/JAM

                                       7



                                                                         Annex 1

                            Revised Book-Entry Rules

The term "Revised Book-Entry Rules" means 31 C.F.R. Section 357 (Treasury bills,
notes and bonds; 12 C.F.R. Section 615 (book-entry securities of the Farm Credit
  Administration); 12 C.F.R. Sections 910 and 912 (book-entry securities of the
   Federal Home Loan Bank); 24 C.F.R. Section 81 (book-entry securities of the
    Federal National Mortgage Association and the Federal Home Loan Mortgage
  Corporation); 12 C.F.R. Section 1511 (book-entry securities of the Resolution
  Funding Corporation; and 31 C.F.R. Section 354 (book-entry securities of the
                      Student Loan Marketing Association).


                                       8



                                  Appendix I-5

                 Form of Opinion of Emmet, Marvin & Martin, LLP,
                     Special New York Counsel to the Trustee



                                                                    APPENDIX I-5

                                        __, 2005

TO THE PARTIES LISTED ON
THE ATTACHED SCHEDULE I

          Re: Cerro Verde - Project Finance

Ladies and Gentlemen:

We have acted as special counsel to Citibank, N.A., as Trustee and Offshore
Collateral Agent for the benefit of the Secured Parties (the "Trustee") in
connection with the execution of the Master Security Agreement, dated as of
September 30, 2005 (the "Agreement"), among Sociedad Minera Cerro Verde S.A.A.,
as Borrower, Japan Bank for International Cooperation, as a Senior Facility
Lender, Sumitomo Mitsui Banking Corporation, as a Lead JBIC Arranger and Global
Coordinator, The Bank of Tokyo-Mitsubishi, Ltd., as a Lead JBIC Arranger, KfW,
as a Senior Facility Lender, CALYON New york Branch, as a Senior Facility
Lender, Lead Arranger and Global Coordinator, The Royal Bank of Scotland plc, as
a Senior Facility Lender and Lead Arranger, The Bank of Nova Scotia, as a Senior
Facility Lender and Lead Arranger, Mizuho Corporate Bank, Ltd., as a Senior
Facility Lender and Lead Arranger, CALYON New York Branch, as Administrative
Agent, Citibank del Peru S.A., as Onshore Collateral Agent and Citibank N.A., as
Offshore Collateral Agent and the Trustee.

     Capitalized terms used and not otherwise defined herein have the meanings
assigned to them in the Agreement.

     In rendering the opinions set forth below, we have examined the originals,
or copies certified to our satisfaction, of such agreements, documents,
certificates and other statements of government officials and corporate officers
of the Trustee and other papers as we deemed relevant and necessary as a basis
for such opinions and have relied as to factual matters on representations,
warranties and other statements therein. In such examination, we have assumed
the genuineness of all signatures (other than the Trustee) and the authenticity
of all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. We have also assumed the
due authorization, execution and delivery of instruments and agreements by the
parties (other than the Trustee) thereto, and the authority and existence of
such parties other than the Trustee.



     Based upon and subject to the foregoing, we are of the opinion that as of
the date hereof:

          1.   The Trustee has (a) been duly incorporated, is validly existing
               and in good standing as a national banking association under the
               laws of the United States of America, (b) the corporate power and
               authority to enter into, and to take all action required of it
               under, and to incur and perform all obligations provided for in
               the Agreement and (c) taken all necessary corporate action to
               authorize the execution and delivery of the Agreement and the
               performance of its obligations thereunder.

          2.   The Agreement has been duly authorized and duly executed and
               delivered by the Trustee.

          3.   The Agreement constitutes a valid and binding obligation of the
               Trustee, enforceable against the Trustee, in accordance with its
               terms, except as the enforceability thereof may be limited by (i)
               bankruptcy, insolvency, reorganization or other similar laws
               affecting the enforcement of creditors' rights generally, as such
               laws would apply in the event of a bankruptcy, insolvency or
               reorganization or similar occurrence affecting the Trustee, as
               the case may be, and (ii) general principles of equity
               (regardless of whether such enforceability is considered in a
               proceeding in equity or at law).

          4.   The execution and delivery of the Agreement by the Trustee and
               the performance by the Trustee of its terms do not conflict with
               or result in a violation of (i) any law or regulation governing
               the banking or trust powers of the Trustee or (ii) any of the
               terms, conditions or provisions of the constitutive documents of
               the Trustee.

          5.   No approval, consent, authorization or other action by, or filing
               with, any governmental authority or agency having jurisdiction
               over the banking or trust powers of the Trustee is required in
               connection with the execution, delivery and performance by the
               Trustee of the terms of the Agreement.

          6.   The Trustee has duly accepted the trusts intended to be created
               by the Agreement.

     We are members of the New York Bar and do not hold ourselves out as experts
on, nor do we express any opinion as to, the laws of any jurisdiction other than
the laws


                                        2



of the State of New York and the Federal laws of the United States. This opinion
is for your benefit and may not be disclosed to or relied upon by any other
person without our prior written consent.

                                        Very truly yours,


                                        3



                                   SCHEDULE I

Citibank, N.A., as Trustee and Offshore Collateral Agent

Citibank del Peru S.A., as Onshore Collateral Agent

Sociedad Minera Cerro Verde S.A.A., as Borrower

Japan Bank for International Cooperation, as a Senior Facility Lender

Sumitomo Mitsui Banking Corporation, as a Lead JBIC Arranger and Global
Coordinator

The Bank of Tokyo-Mitsubishi, Ltd., as a Lead JBIC Arranger

KfW, as a Senior Facility Lender

CALYON New York Branch, as a Senior Facility Lender, Lead Arranger and Global
Coordinator

The Royal Bank of Scotland plc, as a Senior Facility Lender and Lead Arranger

The Bank of Nova Scotia, as a Senior Facility Lender and Lead Arranger

Mizuho Corporate Bank, Ltd., as a Senior Facility Lender and Lead Arranger

CALYON New York Branch, as Administrative Agent


                                        4



                                  Appendix I-6

    Form of Opinion of Rodrigo, Elias & Medrano, Abogados (Operator Opinion)



                                                                    APPENDIX I-6

                              Legal opinion of Rodrigo, Elias & Medrano Abogados
                                                                      (Operator)

Lima, __

Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger

Ladies and Gentlemen:

We have acted as special Peruvian counsel to Minera Phelps Dodge del Peru S.A.C.
(the "Operator") in connection with the following agreements:

(i)  the Operator's Agreement; and

(ii) the Consent and Agreement, dated __, among the Operator, the Offshore
     Collateral Agent and the Borrower (the "Consent and Agreement" and,
     together with the Operator's Agreement, the "Agreements").

Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral
Agent and the Onshore Collateral Agent.

This opinion is delivered to you pursuant to Section 5.01(g)(vii) of the Master
Participation Agreement.

In rendering this opinion, we have assumed, to the extent relevant with respect
to each of the Agreements, that:

(a)  the Consent and Agreement has been duly authorized by, has been executed
     and delivered by, and constitutes legal, valid, binding and enforceable
     obligations of, the Offshore Collateral Agent;



(b)  all signatories to the Consent and Agreement on behalf of the Offshore
     Collateral Agent have been duly authorized;

(c)  the Offshore Collateral Agent is duly organized and validly existing and
     has the power and authority (corporate, limited liability company,
     partnership or other) to execute, deliver and perform the Consent and
     Agreement; and

(d)  each Agreement which is governed by a law other that Peruvian law
     constitutes the legal, valid and binding obligation of the Operator,
     enforceable against the Operator in accordance with its terms, pursuant to
     such applicable governing law.

In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and the Operator, an executed copy of each of the
Master Participation Agreement and the Master Security Agreement, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.

Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:

1.   The Operator is a sociedad anonima cerrada duly incorporated, validly
     existing and in good standing under the laws of Peru.

2.   The Operator has all requisite corporate power to execute and deliver, and
     to incur and perform its obligations under, each of the Agreements.

3.   The execution and delivery by the Operator, and the incurrence and
     performance by the Operator, of its obligations under each of the
     Agreements have been duly authorized by all necessary corporate action on
     the part of the Operator.

4.   Each Agreement has been duly executed and delivered by the Operator and
     constitutes the legal, valid and binding obligation of the Operator,
     enforceable against the Operator in accordance with its terms.

5.   Under Peruvian conflict of laws principles, the stated choice of New York
     law to govern the Agreements will be honored by the courts of Peru, except
     for the limitations of (a) Article 2049 of the Peruvian Civil Code, under
     which provisions of foreign law shall be excluded if they are


                                        2



     incompatible with international public policy or good morals, (b) Article
     2088 of the Peruvian Civil Code, under which the creation, content and
     extinction of security interests on tangible assets located in Peru is
     governed by Peruvian law, and (c) Article 2.1 of the Insolvency System
     General Act, Law No. 27809, under which any insolvency, bankruptcy,
     moratorium, fraudulent conveyance or transfer involving entities domiciled
     in Peru shall be ruled by Peruvian law.

6.   No authorization, approval or consent, and no filing or registration with,
     any Governmental Authority of Peru (except as has already been obtained or
     accomplished and is in full force and effect) is required on the part of
     the Operator (a) for the execution or delivery of, or for the incurrence or
     performance of any obligations under, any of the Agreements, or (b) to
     create or to perfect the security interest in the Operator's Agreement and
     the proceeds thereof purported to be granted by the Borrower for the
     benefit of the Secured Parties under Section 3.03 of the Master Security
     Agreement.

7.   The execution and delivery by the Operator of, the incurrence and
     performance thereby of its obligations under, and the consummation of the
     other transactions contemplated by, any of the Agreements do not and will
     not (a) violate or conflict with any provision of the organizational
     documents of the Operator, (b) violate or conflict with any applicable law,
     rule, regulation or decree of Peru, (c) violate or conflict with any treaty
     or other international agreement to which Peru is subject, or (d) result in
     the creation or imposition of any Lien upon any of its properties pursuant
     to the terms of any of the Agreements.

8.   Each of the Agreements is in proper legal form for the enforcement thereof
     against the Operator in the courts of Peru, as applicable. No registration,
     notarization or other formality (including, without limitation, payment of
     any stamp or similar tax) is required to be accomplished in Peru (except as
     has already been accomplished and is in full force and effect) for the
     legality, validity, enforceability or admissibility in evidence of any of
     the Agreements in Peru, as applicable.

     Please note that the admissibility in evidence of the Agreements before any
     Peruvian court requires such documents to be officially translated into
     Spanish by a duly authorized public translator in Peru. Such translation
     may be done at the time that enforcement is sought.


                                        3



9.   The submission by the Operator to the non-exclusive jurisdiction of the
     Federal or State Court located in New York County in the City of New York,
     and any appellate court from any thereof, with respect to matters arising
     under or in connection with any of the Agreements, is valid and effective
     under the laws of Peru, except for the limitations of Article 2060 of the
     Peruvian Civil Code, under which such submission shall be denied if the
     controversy concerns matters subject to the exclusive jurisdiction of
     Peruvian courts (i.e., in rem rights related to real estate located in
     Peru, criminal offences in Peru or when the parties have expressly or
     implicitly submitted to Peruvian jurisdiction), or if such submission would
     constitute an abuse of law or would contravene Peruvian public policy.

10.  A final, non-appealable judgment against the Operator obtained in the
     jurisdiction agreed to under the Agreements would be recognized, conclusive
     and enforceable in the courts of Peru without re-examination on the merits;
     provided that the following conditions and requirements are met:

     (a)  there is a treaty between Peru and the country in which such judgment
          has been rendered, and the provisions of such treaty shall apply;

     (b)  in the absence of a treaty, the reciprocity rule is applicable (such
          reciprocity being presumed), under which a judgment given by a foreign
          competent court will be admissible in the Peruvian courts and will be
          enforceable thereby, except if according to such foreign law (i)
          judgments issued by Peruvian courts are not admissible in such foreign
          country, or (ii) judgments issued by Peruvian courts are subject to
          re-examination by such foreign competent court of the issues dealt
          therein;

     (c)  in either (a) or (b), (i) such judgment does not resolve matters which
          are subject to exclusive jurisdiction of Peruvian courts, (ii) the
          foreign competent court issuing the judgment holds jurisdiction under
          the rules of international conflicts of law and general principles of
          international procedural jurisdiction, (iii) the defendant against
          whom the enforcement is sought has been summoned in accordance with
          the laws of the place in which the action was brought up and a
          reasonable time to appear before the foreign court as well as due
          procedural guarantees to defend the case were granted to the
          defendant, (iv) the foreign judgment has the authority of res judicata
          under the laws of such foreign jurisdiction, (v) there are no pending
          legal proceedings in Peru between the


                                       4



          same parties which relate to the same matters, started prior to the
          filing of the complaint that concluded with such foreign judgment,
          (vi) such foreign judgment is not compatible with other foreign
          judgments which meet the admissibility and enforceability requirements
          established by Peruvian law which have been previously issued with
          respect to the same subject matter, and (vii) such foreign judgment is
          not contrary to public policy or good morals.

     As of this date, there is no treaty between Peru and the State of New York
     or the United States of America on the enforcement of foreign judgments. In
     addition, we have no reason to believe that any obligation under the
     Agreements would be contrary to Peruvian public policy and international
     treaties to which Peru is subject or generally accepted principles of
     international law.

     Assuming that the foreign final judgment complies with the standards set
     forth in this opinion, and in the absence of any condition referred to
     above which would render a foreign judgment unenforceable, the respective
     parties would be entitled to enforce such judgment in Peru by proceedings
     for the enforcement of a foreign final judgment under the laws of Peru.

The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Our opinions
set forth herein are based upon the facts in existence and laws in effect as of
the date hereof and we expressly disclaim any obligation to update our opinions
herein with respect to any changes in such facts or laws that may come to our
attention after delivery of this opinion.

This opinion may not be relied upon by any Person other than you or for any
purpose other than in connection with the transactions contemplated by the
Master Participation Agreement without, in each instance, our prior written
consent.

                                Very truly yours,


                                       5



                                  Appendix I-7

Form of Opinion of Rodrigo, Elias & Medrano, Abogados (ElectroPeru S.A. Opinion)


                                       6



                                                                    APPENDIX I-7

                              Legal opinion of Rodrigo, Elias & Medrano Abogados
                                                                   (ElectroPeru)

Lima, __

Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger

Ladies and Gentlemen:

We have reviewed an executed copy of each of the following agreements:

(i)  the Power Supply Agreement (110 MW) (the "PSA"), dated December 31, 2004,
     between Sociedad Minera Cerro Verde S.A.A. (the "Borrower") and ElectroPeru
     S.A. ("ElectroPeru"); and

(ii) the Power Supply Agreement (46 MW), dated December 31, 2004, between the
     Borrower and ElectroPeru (together with the PSA, the "Agreements").

Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral
Agent and the Onshore Collateral Agent.

This opinion is delivered to you pursuant to Section 5.01(g)(vii) of the Master
Participation Agreement.

In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and ElectroPeru, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.



Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:

1.   As of December 31, 2004, the execution and delivery by ElectroPeru, and the
     incurrence and performance by ElectroPeru, of its obligations under each of
     the Agreements had been duly authorized by all necessary corporate action
     on the part of ElectroPeru.

2.   As of December 31, 2004, each of the Agreements constituted, and as of the
     date hereof each of the Agreements constitutes, the legal, valid and
     binding obligation of ElectroPeru, enforceable against ElectroPeru in
     accordance with its terms.

3.   Each of the Agreements is in proper legal form for the enforcement thereof
     against ElectroPeru in the courts of Peru. No registration, notarization or
     other formality (including, without limitation, payment of any stamp or
     similar tax) is required to be accomplished in Peru (except as has already
     been accomplished and is in full force and effect) for the legality,
     validity, enforceability or admissibility in evidence of each of the
     Agreements in Peru. We have no evidence that the filing of each of the
     Agreements required to be made by ElectroPeru pursuant to Article 8 of the
     Electricity Concessions Act, Law Decree No. 25844, has been made but such
     filing does not affect the legality, validity, enforceability or
     admissibility in evidence of the Agreements in Peru.

The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Unless
otherwise indicated, our opinions set forth herein are based upon the facts in
existence and laws in effect as of the date hereof and we expressly disclaim any
obligation to update our opinions herein with respect to any changes in such
facts or laws that may come to our attention after delivery of this opinion.

This opinion may not be relied upon by any Person other than you or for any
purpose other than in connection with the transactions contemplated by the
Master Participation Agreement without, in each instance, our prior written
consent.

                                Very truly yours,


                                       2



                                  Appendix I-8

     Form of Opinion of Rodrigo, Elias & Medrano, Abogados (EGASA Opinion)



                                                                    APPENDIX I-8

                              Legal opinion of Rodrigo, Elias & Medrano Abogados
                                                                         (EGASA)

Lima, __

Japan Bank for International Cooperation
KfW
CALYON New York Branch
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger
The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger

Ladies and Gentlemen:

We have reviewed an executed copy of the Power Supply Agreement (the "PSA"),
dated December 29, 2004, between Sociedad Minera Cerro Verde S.A.A. (the
"Borrower") and Empresa de Generacion Electrica de Arequipa S.A. - EGASA
("EGASA").

Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement, dated __, among the Borrower, the
Senior Facility Lenders, the Lead JBIC Arrangers, the Global Coordinators, the
Lead Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral
Agent and the Onshore Collateral Agent.

This opinion is delivered to you pursuant to Section 5.01(g)(vii) of the Master
Participation Agreement.

In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and EGASA, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.

Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:



1.   As of December 29, 2004, the execution and delivery by EGASA, and the
     incurrence and performance by EGASA, of its obligations under the PSA had
     been duly authorized by all necessary corporate action on the part of
     EGASA.

2.   As of December 29, 2004, the PSA constituted, and as of the date hereof the
     PSA constitutes, the legal, valid and binding obligation of EGASA,
     enforceable against EGASA in accordance with its terms.

3.   The PSA is in proper legal form for the enforcement thereof against EGASA
     in the courts of Peru. No registration, notarization or other formality
     (including, without limitation, payment of any stamp or similar tax) is
     required to be accomplished in Peru (except as has already been
     accomplished and is in full force and effect) for the legality, validity,
     enforceability or admissibility in evidence of the PSA in Peru. We have no
     evidence that the filing of the PSA required to be made by EGASA pursuant
     to Article 8 of the Electricity Concessions Act, Law Decree No. 25844, has
     been made but such filing does not affect the legality, validity,
     enforceability or admissibility in evidence of the PSA in Peru.

The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Unless
otherwise indicated, our opinions set forth herein are based upon the facts in
existence and laws in effect as of the date hereof and we expressly disclaim any
obligation to update our opinions herein with respect to any changes in such
facts or laws that may come to our attention after delivery of this opinion.

This opinion may not be relied upon by any Person other than you or for any
purpose other than in connection with the transactions contemplated by the
Master Participation Agreement without, in each instance, our prior written
consent.

Very truly yours,



                                  Appendix I-9

     Form of Opinion of Sullivan & Cromwell LLP (Financing Documents)



                                                                    APPENDIX I-9

                                                                    [__], 200[5]

The Institutions named in Schedule I hereto,
   as Senior Facility Lenders.

CALYON New York Branch,
   as Administrative Agent for the Senior Lenders,
      1301 Avenue of the Americas,
         New York, New York 10019.

Ladies and Gentlemen:

          In connection with (i) the Completion Guarantee, dated as of September
[30], 2005 (the "Completion Guarantee"), among Sumitomo Metal Mining Co., Ltd.,
a Japanese corporation ("SMM"), Sumitomo Corporation, a Japanese corporation
("SC"), Compania de Minas Buenaventura S.A.A., a Peruvian sociedad anonima
abierta ("BVN"), Phelps Dodge Corporation, a New York corporation ("PDC"), Japan
Bank for International Cooperation, a Japanese government financial institution
organized under the laws of Japan ("JBIC"), Sumitomo Mitsui Banking Corporation,
a stock corporation organized under the laws of Japan ("SMBC"), The Bank of
Tokyo-Mitsubishi, Ltd., a banking institution organized under the laws of Japan
("BOT-M"), KfW, a public



The Institutions named in Schedule I hereto
CALYON New York Branch                                                       -3-


corporation formed under the laws of the Federal Republic of Germany ("KfW"),
CALYON New York Branch, a licensed branch of a banking corporation organized
under the laws of the French Republic ("CALYON"), The Royal Bank of Scotland
plc, a public limited company incorporated under the laws of Scotland ("RBS"),
The Bank of Nova Scotia, a Canadian chartered bank, organized under the laws of
Canada ("Scotia Capital"), Mizuho Corporate Bank, Ltd., a banking institution
organized under the laws of Japan ("Mizuho"), and CALYON, as Administrative
Agent for the Senior Lenders (the "Administrative Agent"), (ii) the Transfer
Restriction Agreement, dated as of September [30], 2005 (the "Transfer
Restriction Agreement"), among SMM Cerro Verde Netherlands B.V., a Dutch
corporation (the "Sumitomo Participant"), BVN, Cyprus Climax Metals Company, a
corporation organized under the laws of the State of Delaware ("CCMC"), SMM, SC,
PDC, JBIC, SMBC, BOT-M, KfW, CALYON, RBS, Scotia Capital, Mizuho and the
Administrative Agent, and (iii) the Consent and Agreement, dated as of September
[30], 2005 (the "Consent"), among the Sumitomo Participant, SMM, SC, Summit
Global Management II B.V, a Dutch corporation ("SGM"), BVN, CCMC, PDC and
Citibank, N.A., a national banking association organized under the laws of the
United States of America, as Offshore Collateral Agent, we, as special New York
counsel to SMM, SC, the Sumitomo Participant and SGM, have examined such
corporate records, certificates and other documents and such questions of law as
we have considered necessary or appropriate



The Institutions named in Schedule I hereto
CALYON New York Branch                                                       -4-


for the purposes of this opinion. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Completion
Guarantee.

          Upon the basis of such examination, it is our opinion that each of the
Completion Guarantee, the Transfer Restriction Agreement and the Consent (the
"Agreements") constitutes a valid and legally binding obligation of each of SMM,
SC, SGM and the Sumitomo Participant enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.

          We express no opinion as to:

          (i) Section 19.3(a) of the Completion Guarantee, Section 4.08(a) of
     the Transfer Restriction Agreement and Section 5(e) of the Consent, to the
     extent that each such Section relates to the waiver of inconvenient forum
     with respect to proceedings in any United States Federal Court located in
     the Borough of Manhattan, The City of New York;

          (ii) Section 19.3(a) of the Completion Guarantee, Section 4.08(a) of
     the Transfer Restriction Agreement and Section 5(e) of the Consent insofar
     as such provisions relate to subject matter jurisdiction of any United
     States Federal court;



The Institutions named in Schedule I hereto
CALYON New York Branch                                                       -5-


          (iii) any provision of the Completion Guarantee purporting to provide
     indemnification to any person to the extent inconsistent with public policy
     or otherwise contrary to law;

          (iv) any provision of the Agreements insofar as such provision is
     invalid, not binding or unenforceable under the laws of the jurisdiction
     (other than the State of New York) under which a party to such agreement is
     organized; and

          (v) the validity or binding effect of any waiver under any of the
     Agreements or any consent thereunder, relating to the rights of any of SMM,
     SC, the Sumitomo Participant or SGM or duties owing to any of them existing
     as a matter of law except to the extent that they may so waive or consent
     under applicable law.

          We note that provisions of the Agreements that permit persons named
therein to take action or make determinations may be subject to a requirement
that such action be taken or such determinations be made on a reasonable basis
or in good faith.

          We also note that:

          (i) provisions of the Agreements that (A) prohibit or restrict parties
     thereto from transferring their respective rights in the collateral or any
     proceeds thereof or from creating, attaching, perfecting or enforcing a
     security interest in such collateral except as specified therein, (B)
     impose a consent requirement on



The Institutions named in Schedule I hereto
CALYON New York Branch                                                       -6-


     such transfer or pledge, or (C) provide that such transfer or pledge may
     give rise to a default, breach, right of recoupment, claim, defense,
     termination, right of termination or remedy may be unenforceable by virtue
     of Sections 9-401, 9-406 and/or 9-408 of the UCC as in effect on the date
     hereof in the State of New York;

          (ii) certain remedial and other provisions of the Agreements (A) may
     be subject to the right of account debtors, the terms of the contracts with
     such account debtors and any claims or defenses of such account debtors
     arising under or outside such contracts and (B) may be unenforceable in
     whole or in part under applicable law, provided that the inclusion of such
     provisions does not, in our opinion (but subject to the other comments and
     qualifications set forth in this opinion letter), make the remedies and
     procedures that will be afforded to the Senior Lenders inadequate for the
     practical realization of the benefits purported to be provided to the
     Senior Lenders by the Agreements; and

          (iii) the enforceability of Section 9.14 of the Completion Guarantee,
     Section 4.09 of the Transfer Restriction Agreement and Section 5(c) of the
     Consent to the effect that terms may not be waived or modified except in
     writing may be limited under certain circumstances.

          In rendering the foregoing opinion, we have assumed without
independent verification that:



The Institutions named in Schedule I hereto
CALYON New York Branch                                                       -7-


     (i) each party to each Agreement has been duly organized and is an existing
     legal entity in good standing under the laws of its jurisdiction of
     organization;

     (ii) each Agreement has been duly authorized, executed and delivered by the
     respective parties thereto;

     (iii) the signatures on all documents examined by us are genuine; and

     (iv) each of the Agreements is in consideration for, or relates to, an
     obligation arising out of a transaction covering in the aggregate not less
     than US$1,000,000.

          The foregoing opinion is limited to the Federal laws of the United
States and the laws of the State of New York, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction.

          With your approval, we have relied as to certain matters upon
information obtained from public officials, officers of SMM, SC, SGM and the
Sumitomo Participant and other sources believed by us to be responsible.

          This opinion is being delivered to you pursuant to Section 5.01(g)(ix)
of the Master Participation Agreement solely for your benefit and is not to be
made available to, nor may it be relied upon, by any other person, firm or
entity.

                                                               Very truly yours,



                                                                    APPENDIX I-9

                                   Schedule I

Japan Bank for International Cooperation,
4 - 1, Ohtemachi 1 - Chome,
Chiyoda - Ku,
Tokyo 100 - 8144,
Japan.

Sumitomo Mitsui Banking Corporation,
1-2, Yurakucho 1-chome,
Chiyoda-ku,
Tokyo,
Japan (Zip: 100-0006).

The Bank of Tokyo-Mitsubishi, Ltd.,
2-7-1, Marunouchi, Chiyoda-Ku,
Tokyo 100-8388,
Japan.

KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch, as Administrative Agent for the Senior Lenders,
1301 Avenue of the Americas,
New York, New York 10019.



                                  Appendix I-10

     Form of Opinion of Sullivan & Cromwell LLP (Offtake Agreements)



                                                                   APPENDIX I-10

                                                                    [__], 200[5]

Japan Bank for International Cooperation,
Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd.,
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
   c/o CALYON New York Branch,
   as Administrative Agent for the Senior Lenders,
      1301 Avenue of the Americas,
         New York, New York 10019.

Ladies and Gentlemen:

     In connection with the Concentrate Sales Agreement, dated as of June 1,
2005, as amended by Amendment No. 1, dated as of September [30], 2005 (as so
amended, the "Concentrate Sales Agreement"), between Sumitomo Metal Mining Co.,
Ltd., a Japanese corporation ("SMM"), and Sociedad Minera Cerro Verde S.A.A., a
sociedad anonima abierta organized under the laws of the Republic of Peru
("Cerro Verde"), we, as special New York counsel to SMM, have examined such
corporate records, certificates and other documents and such questions of law as
we have considered necessary or appropriate for the purposes of this opinion.



Japan Bank for International Cooperation,
Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd.,
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch,
as Administrative Agent for the Senior Lenders,                              -2-


     Upon the basis of such examination, it is our opinion that the Concentrate
Sales Agreement constitutes a valid and legally binding obligation of SMM
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.

     We express no opinion as to:

          (i) Section 17.1 of the Concentrate Sales Agreement, to the extent
that such Section relates to a waiver of inconvenient forum with respect to
proceedings in any United States Federal Court located in the Borough of
Manhattan, The City of New York;

          (ii) Section 17.1 or 23.1(d) of the Concentrate Sales Agreement
insofar as such provisions relate to subject matter jurisdiction of any United
States Federal court;

          (iii) the enforceability of any provisions of the Concentrate Sales
Agreement providing for payment to be made without any set-off, defense or
counterclaim;

          (iv) the validity or binding effect of any waiver under the
Concentrate Sales Agreement or any consent thereunder, relating to the rights
SMM or duties owing



Japan Bank for International Cooperation,
Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd.,
KfW,
CALYON New York Branch,
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.,
c/o CALYON New York Branch,
as Administrative Agent for the Senior Lenders,                              -3-


to it existing as a matter of law except to the extent they may so waive or
consent under applicable law;

          (v) any provision of the Concentrate Sales Agreement insofar as such
provision is invalid, not binding or unenforceable under the laws of the
jurisdiction (other than the State of New York) under which a party to such
agreement is organized; and

          (vi) the enforceability of SMM's obligations for any default interest
charges or late charges.

     We note that provisions of the Concentrate Sales Agreement that permit
persons named therein to take action or make determinations may be subject to a
requirement that such action be taken or such determinations be made on a
reasonable basis or in good faith

     We also note that:

     (i) the enforceability of Section 24.1 of the Concentrate Sales Agreement
to the effect that terms may not be waived or modified except in writing may be
limited under certain circumstances; and




Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders.                              -4-


     (ii) certain remedial and other provisions of the Concentrate Sales
Agreement (A) may be subject to the right of account debtors, the terms of the
contracts with such account debtors and any claims or defenses of such account
debtors arising under or outside such contracts and (B) may be unenforceable in
whole or in part under applicable law, provided that the inclusion of such
provisions does not, in our opinion (but subject to the other comments and
qualifications set forth in this opinion letter), make the remedies and
procedures that will be afforded to the Senior Project Lenders (as defined in
the Concentrate Sales Agreement) inadequate for the practical realization of the
benefits purported to be provided to the Senior Project Lenders by the
Concentrate Sales Agreement.

     The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of New York, and we are expressing no opinion as to
the effect of the laws of any other jurisdiction.

     We have relied as to certain matters upon information obtained from public
officials, officers of SMM and other sources believed by us to be responsible,
and we have assumed, without independent verification that:



Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders.                              -5-


          (i) each party to the Concentrate Sales Agreement has been duly
organized and is an existing legal entity in good standing under the laws of its
jurisdiction of organization;

          (ii) the Concentrate Sales Agreement have been duly authorized,
executed and delivered by each party thereto;

          (iii) the signatures on all documents examined by us are genuine;

          (iv) each of the parties to the Concentrate Sales Agreement intends to
be bound thereby within the meaning of Section 2-305 of the Uniform Commercial
Code as in effect on the date hereof in the State of New York; and

          (v) the Concentrate Sales Agreement is in consideration for, or
relates to, an obligation arising out of a transaction covering in the aggregate
not less than US$1,000,000.

     This opinion is being delivered to you pursuant to Section 24.6 of the
Concentrate Sales Agreement and Section 5.01(g)(x) of the Master Participation
Agreement, dated as of September [30], 2005, among Sociedad Minera Cerro Verde
S.A.A., a sociedad anomina abierta listed on the Lima Stock Exchange and
organized under the laws of



Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi, Ltd.
KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders.                              -6-


Peru, Japan Bank for International Cooperation, a Japanese government financial
institution organized under the laws of Japan, Sumitomo Mitsui Banking
Corporation, a stock corporation organized under the laws of Japan, The Bank of
Tokyo-Mitsubishi, Ltd., a banking institution organized under the laws of Japan,
KfW, a public corporation formed under the laws of the Federal Republic of
Germany, CALYON New York Branch, a licensed branch of a banking corporation
organized under the laws of the French Republic, The Royal Bank of Scotland plc,
a public limited company incorporated under the laws of Scotland, The Bank of
Nova Scotia, a Canadian chartered bank, organized under the laws of Canada,
Mizuho Corporate Bank, Ltd., a banking institution organized under the laws of
Japan, and

CALYON New York Branch, as administrative agent for the senior lenders, solely
for your benefit and is not to be made available to, nor may it be relied upon,
by any other person, firm or entity.

                                                               Very truly yours,



                                  Appendix I-11

             Form of Opinion of Sakai & Nimura (Offtake Agreements)



                                                                   APPENDIX I-11

                                 SAKAI & MIMURA

                  9TH FLOOR, OTEMACHI TATEMONO TORANOMON BLDG.
                             6-12 TORANOMON 1-CHOME
                         MINATO-KU, TOKYO 105-0001 JAPAN

                           TELEPHONE: +81-3-3519-8321
                           FACSIMILE: +81-3-3519-8322

                          E-MAIL: sakai.h@sakailaw.com

                                www.sakailaw.com

[_____________], 2005

Japan Bank for International Cooperation
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi
KfW
The Royal Bank of Scotland plc
The Bank of Nova Scotia
Mizuho Corporate Bank, Ltd.
CALYON New York Branch, for itself and as Administrative Agent

Re:  Concentrate Sales Agreement between Sumitomo Metal Mining Co., Ltd.
     ("Buyer") and Sociedad Minera Cerro Verde S.A.A. ("Seller") dated as of
     June 1, 2005 (as amended by the Letter of Amendment to the SMM Concentrate
     Sales Agreement ("Amendment No. 1"), dated as of September 30, 2005; the
     "Agreement");
     Opinion of Buyer's Counsel under Section 24.6 of the Agreement.

Dear Sirs:

We have acted as counsel in Japan for Buyer in connection with the captioned
matter, and have been asked to provide the legal opinion ("Opinion") required
under Section 24.6 of the Agreement in respect of Buyer. Capitalized terms used
and not otherwise defined herein have the meanings given to them in the MPA.

In connection with this Opinion, we have reviewed and/or relied on copies or
certified copies of the following:



                                                                  SAKAI & MIMURA

a)   the Master Participation Agreement dated as of September 30, 2005, among
     Seller, Japan Bank for International Cooperation ("JBIC"), Sumitomo Mitsui
     Banking Corporation ("SMBC"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"),
     KfW, The Royal Bank of Scotland plc ("RBS"), The Bank of Nova Scotia
     ("Scotia Capital"), Mizuho Corporate Bank Ltd. ("Mizuho") and CALYON New
     York Branch, in its individual capacity and as Administrative Agent for the
     Senior Facility Lenders ("Calyon");

b)   the Master Security Agreement dated as of September 30, 2005, among Seller,
     JBIC, SMBC, BOT-M, KfW, RBS, Scotia Capital, Mizuho, Calyon, Citibank del
     Peru S.A., as Onshore Collateral Agent and Citibank, N.A., as Trustee and
     Offshore Collateral Agent; and

c)   the Agreement and the signature pages for the Agreement, together with the
     stamped and signed notarial certificate of the signature of the
     representative director of Buyer,

d)   the articles of incorporation of Buyer,

e)   the internal regulations of the board of directors of Buyer,

f)   the company registration of Buyer dated September 22, 2005,

g)   an excerpt from the minutes of a meeting of the board of directors of Buyer
     [dated March 8, 2005], passing a resolution approving the execution of the
     Agreement and delegating final approval of contents to the executive
     officer in charge of the Mineral Resources Division.

h)   such other corporate records, agreements and instruments, certificates and
     other material as we have deemed necessary or desirable, and

i)   such statements and confirmations from officers of Buyer, and such other
     matters of fact and law, as we have deemed appropriate for the purposes of
     this Opinion.

In giving this Opinion, we have assumed (but not independently verified):

1)   That the Agreement has been duly authorized, executed and delivered by each
     of the parties thereto (except in the case of Buyer) in the same form as
     reviewed by us;

2)   That the Agreement is legal and valid under the law of the State of New
     York, by which it is stated to be governed, and that the transactions
     contemplated by the Agreement that are to be performed in the Republic of
     Peru, where Seller is located, are legal under the laws of the Republic of
     Peru; and



                                                                  SAKAI & MIMURA

3)   That all copies reviewed by us are in conformity with the originals
     thereof, and that any signatures thereon are genuine and affixed (except in
     the case of Buyer) by persons with authority to do so.

We are qualified to practice law in Japan, and we do not express any opinion
with respect to the laws of any other jurisdiction, and this opinion is limited
to matters of Japanese law under the laws of Japan in force as of the date
hereof. Particularly, we expressly offer no opinion as to the laws of the State
of New York, which is the governing law under the Agreement.

Based on the above, and subject to the qualifications and limitations set out
below, we are of the opinion that:

1)   Buyer is a corporation duly organized, and is validly existing under the
     laws of Japan where Buyer was incorporated;

2)   Buyer has full power and authority to own its properties and conduct the
     business in which it is engaged, and to execute, deliver and perform, and
     incur the obligations provided in the Agreement;

3)   The Agreement has been duly authorized, executed and delivered by Buyer and
     constitutes the legal, valid and binding obligation of Buyer, enforceable
     in accordance with its terms; and

4)   All authorizations, licenses, approvals (including without limitation,
     foreign exchange approvals) and consents from, and filings and
     registrations with, governmental authorities in Japan which are necessary
     for the execution, delivery and performance of the Agreement by Buyer have
     been obtained and are in full force and effect.

5)   The making and performance by Buyer of the Agreement do not and will not
     (i)violate any provision of law, statute, rule, order, injunction, decree,
     writ, judgment or regulation or any provision of its organizational
     documents as currently in effect or (ii)result in the breach of, or
     constitute a default or require any consent under, or result in the
     creation of any lien or encumbrance upon, any of its properties, revenues
     or assets pursuant to, any indenture, mortgage, contract or other agreement
     or instrument to which Buyer is now a party or by which it or its
     properties may now be bound or affected.

6)   Assuming that the Agreement is legal, valid, binding and enforceable under
     the laws of the State of New York:

     (a)  The choice of the laws of the State of New York to govern the
          Agreement is a valid choice of law under the laws of Japan, and a
          court in Japan would uphold such choice of law, in regard to
          substantive law issues, in a suit on the Agreement brought in a court
          in Japan.



                                                                  SAKAI & MIMURA

     (b)  Under the Agreement, Buyer has validly submitted to the jurisdiction
          of the State and Federal courts located in the Borough of Manhattan,
          the City of New York for the purposes specified in Section 17.1 of the
          Agreement.

7)   If any final judgment of a foreign court is rendered with respect to the
     Agreement, the judgment would be recognized and enforced by the courts of
     Japan without re-examination or re-litigation on the merits thereof,
     subject to the conditions stipulated in Article 118 of the Code of Civil
     Procedure of Japan that:

     (a)  the foreign court's jurisdiction is allowed by laws and ordinances or
          by treaty;

     (b)  the defeated party has received service (except for service by
          publication of notice or any similar means) of summons or any other
          necessary orders to commence procedures or has responded in the action
          without receiving service thereof;

     (c)  the contents of the judgment and the procedures of the litigation are
          not contrary to the public order or morals of Japan; and

     (d)  there is reciprocity.

8)   An arbitral award will be enforceable in Japan, pursuant to a request for
     and receipt of an enforcement decision made in the competent court in
     Japan, unless any one of the following under Article 45 of the Arbitration
     Law of Japan is applicable (with respect to the grounds described in items
     (a) through (g), this shall be limited to where either of the parties has
     proven the existence of the ground in question):

     (a)  the arbitration agreement is not valid due to limits to a party's
          capacity;

     (b)  the arbitration agreement is not valid for a reason other than limits
          to a party's capacity under the law to which the parties have agreed
          to subject it (or failing any indication thereon, the law of the
          country under which the place of arbitration falls);

     (c)  a party was not given notice as required by the provisions of the law
          of the country under which the place of arbitration falls (or where
          the parties have otherwise reached an agreement on matters concerning
          the provisions of the law that do not relate to public policy, such
          agreement) in the proceedings to appoint arbitrators or in the
          arbitral proceedings;

     (d)  a party was unable to defend itself in the arbitral proceedings;

     (e)  the arbitral award contains decisions on matters beyond the scope of
          the arbitration agreement or the claims in the arbitral proceedings;

     (f)  the composition of an arbitral tribunal or the arbitral proceedings
          were not in accordance with the provisions of the law of the country
          under which the place of arbitration falls (or where the parties have
          otherwise reached an



                                                                  SAKAI & MIMURA

          agreement on matters concerning the provisions of the law that do not
          relate to public policy, such agreement);

     (g)  according to the law of the country under which the place of
          arbitration falls (or where the law of a country other than the
          country under which the place of arbitration falls was applied to the
          arbitral proceedings, such country), the arbitral award has not yet
          become binding, or the arbitral award has been set aside or suspended
          by a court of such country;

     (h)  the claims in the arbitral proceedings relate to a dispute that cannot
          constitute the subject of an arbitration agreement under the laws of
          Japan; or

     (i)  the content of the arbitral award would be contrary to the public
          policy or good morals of Japan.

9)   Assuming that CT Corporation System has, under the laws of the State of New
     York, been duly appointed by Buyer as its agent to receive service of
     process in the State of New York, service of process made on CT Corporation
     System pursuant to such appointment will, under the laws of Japan, be
     considered served personally on Buyer and satisfy the condition of Article
     118 of the Code of Civil Procedure of Japan in regard to a judgment
     rendered by a New York court.

10)  Assignment by Seller of its rights to receipt of payments under Article 15
     of the Agreement is valid and enforceable against Buyer under the laws of
     Japan; provided that in order to fully perfect the effectiveness of such
     assignment against third persons, either the notice by Seller to Buyer of
     such assignment must be made by a date-certified writing (proved by
     notarization or contents-certified mail), or recordation with the competent
     registry must be made.

The opinions expressed above are subject to the following qualifications and
limitations:

(i)  Nothing in this Opinion should be taken as indicating that the remedies of
     specific performance or injunction (being in some instances discretionary
     remedies of the court) would necessarily be available with respect to any
     particular provision of the Agreement in any particular instance.

(ii) Enforcement of the Agreement against Buyer will be subject to (i)
     applicable bankruptcy, insolvency, moratorium, or other similar laws
     affecting the enforcement of creditor rights generally, (ii) laws imposing
     duties to act in good faith or in a commercially reasonable manner, and
     (iii) laws respecting or affecting the procedural or remedial provisions of
     the Agreement.

This Opinion is provided solely in connection with the Agreement, in respect of
the matters specifically set out above, and is not to be used in relation to any
other matter or fact situation.



                                                                  SAKAI & MIMURA

Sincerely yours,
SAKAI & MIMURA


Hideyuki Sakai
Managing Partner



                                  Appendix I-12

             Form of Opinion of Sakai & Nimura (Financing Documents)



                                                                   APPENDIX I-12

                                 SAKAI & MIMURA

                  9TH FLOOR, OTEMACHI TATEMONO TORANOMON BLDG.
                             6-12 TORANOMON 1-CHOME
                         MINATO-KU, TOKYO 105-0001 JAPAN

                           TELEPHONE: +81-3-3519-8321
                           FACSIMILE: +81-3-3519-8322
                          E-MAIL: sakai.h@sakailaw.com

                                www.sakailaw.com

[__________], 2005

CALYON, New York Branch

as Administrative Agent under the Master Participation Agreement,
[Address]

Japan Bank for International Cooperation
4-1, Ohtemachi 1-Chome, Chiyoda - Ku
Tokyo, 100-8144 Japan

Sumitomo Mitsui Banking Corporation
1-2, Yurakucho 1-chome, Chiyoda-ku
Tokyo, 100-0006 Japan

The Bank of Tokyo-Mitsubishi, Ltd.
2-7-1, Marunouchi, Chiyoda-Ku
Tokyo, 100-8388 Japan

KfW,
CALYON, New York Branch
The Royal Bank of Scotland plc,
The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd.
c/o CALYON, New York Branch
as Administrative Agent for the Senior Lenders
[Address]

Re:  Opinion for Sumitomo Metal Mining Co., Ltd. ("SMM") and Sumitomo
     Corporation ("SC") (also referred to as "Parent Company" or, collectively,



                                                                  SAKAI & MIMURA

     "Parent Companies") in respect of (1) Completion Guarantee, (2) Transfer
     Restrictions Agreement, (3) the Shareholders Agreement and (4) Consent and
     Agreement (collectively, "Opinion Agreements"), in connection with the
     Sulfide Project concerning Sociedad Minera Cerro Verde S.A.A.

     Dear Sirs:

We have acted as counsel in Japan for Parent Companies in connection with the
captioned matter, and have been asked to provide the legal opinion ("Opinion")
required under Section 5.01 (g)(vi) of the Master Participation Agreement dated
as of September 30, 2005 (the "Master Participation Agreement"), among Seller,
Japan Bank for International Cooperation, Sumitomo Mitsui Banking Corporation,
The Bank of Tokyo-Mitsubishi, Ltd., KfW, The Royal Bank of Scotland plc, The
Bank of Nova Scotia, Mizuho Corporate Bank, Ltd. and CALYON New York Branch, in
its individual capacity and as Administrative Agent for the Senior Facility
Lenders, in respect of the Parent Companies. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Master Participation Agreement.

In connection with this Opinion, we have reviewed and/or relied on copies or
certified copies of the following:

a)   Opinion Agreements

     -    the Completion Guarantee

     -    the Transfer Restrictions Agreement

     -    the Shareholders Agreement

     -    the Consent and Agreement

b)   Documents and materials in regard to SMM

     -    the company registration of SMM dated September 22, 2005

     -    the articles of incorporation of SMM

     -    the internal regulations of the board of directors of SMM

     -    an excerpt from the minutes of a meeting of the board of directors of
          SMM dated April 28, 2005, passing a resolution approving the
          execution, delivery and performance of the Completion Guarantee

     -    internal approval of SMM dated [__], 2005, approving the execution of
          the Transfer Restrictions Agreement and the Consent and Agreement

     -    an excerpt from the minutes of a meeting of the board of directors of
          SMM dated March 8, 2005, passing a resolution approving the execution
          of the Shareholders Agreement

     -    such other corporate records, agreements and instruments, certificates
          and other material as we have deemed necessary or desirable

     -    such statements and confirmations from officers of SMM (but without
          independent verification), and such other matters of fact and law, as
          we have deemed appropriate for the purposes of this Opinion

c)   Documents and materials in regard to SC



                                                                  SAKAI & MIMURA

     -    the company registration of SC dated September 20, 2005

     -    the articles of incorporation of SC

     -    the internal regulations of the board of directors of SC

     -    a certified excerpt from the minutes of a meeting of the board of
          directors of SC dated December 22, 2004, passing a resolution
          approving the project for the acquisition of the shares of Sociedad
          Minera Cerro Verde S.A.A. through the joint venture company with SMM

     -    the internal approval of the Mineral Resources and Energy Business
          Unit of SC dated March 22, 2005, approving the execution of the
          Shareholders Agreement and transactions thereunder in the forms
          presented to the Unit

     -    the internal approval of the Mineral Resources and Energy Business
          Unit of SC dated May 17, 2005, approving the execution of the Opinion
          Agreements and transactions thereunder in the forms presented to the
          Unit

     -    the internal rules of the Mineral Resources and Energy Business Unit
          setting the scope of decisions and standards for affixing seal and/or
          signature by the Unit

     -    such other corporate records, agreements and instruments, certificates
          and other material as we have deemed necessary or desirable

     -    such statements and confirmations from officers of SC (but without
          independent verification), and such other matters of fact and law, as
          we have deemed appropriate for the purposes of this Opinion

In giving this Opinion, we have assumed (but not independently verified):

1)   That the Opinion Agreements have been duly authorized, executed and
     delivered by all parties thereto (except in the case of SMM and SC) in the
     same form as reviewed by us;

2)   That the Opinion Agreements are legal and valid under the law of the State
     of New York, by which they are stated to be governed, and that all of the
     actions under the Opinion Agreements that are to be performed in the
     Republic of Peru, where Sociedad Minera Cerro Verde S.A.A. is located, are
     legal under the laws of the Republic of Peru; and

3)   That all copies reviewed by us are in conformity with the originals
     thereof.

We are qualified to practice law in Japan, and we do not express any opinion
with respect to the laws of any other jurisdiction, and this opinion is limited
to matters of Japanese law under the laws of Japan in force as of the date
hereof. Particularly, we expressly offer no opinion as to the laws of the State
of New York, which is the governing law under the Opinion Agreements.

Based on the above, and subject to the qualifications and limitations set out
below, we are of the opinion that:



                                                                  SAKAI & MIMURA

1.   Each Parent Company is a corporation duly organized, and validly existing
     under the laws of Japan and has all requisite power and authority to own
     its property and conduct its business.

2.   Each Parent Company has full power and authority to enter into each of the
     Opinion Agreements to which it is party and to incur and perform the
     obligations provided for therein.

3.   Each Opinion Agreement has been duly authorized, executed and delivered by
     each Parent Company thereto and constitute the valid and legally binding
     obligation of each Parent Company thereto, enforceable in accordance with
     its terms.

4.   All authorizations, approvals and consents from and filings and
     registrations with, governmental authorities in Japan which are necessary
     for the execution, delivery and performance of each Opinion Agreement by
     each Parent Company have been obtained and are in full force and effect.

5.   There is no provision of law, statute, regulation, rule, order, injunction,
     decree, writ or judgment, or the charter or constitutive documents of each
     Parent Company, and no provision of any mortgage, indenture, contract or
     agreement binding on each Parent Company or affecting any of its respective
     properties, which would prohibit, conflict with or in any way prevent the
     execution, delivery, or performance by each Parent Company of any of the
     Opinion Agreements to which it is a party. Except as provided in the
     Opinion Agreements, the execution, delivery and performance of the Opinion
     Agreements will not result in the creation or imposition of any lien,
     security interest, charge or encumbrance of any nature upon the property of
     each Parent Company. The making and performance by the Parent Companies of
     the Opinion Agreements do not and will not (i) violate any provision of law
     or regulation or any provision of its organizational documents as currently
     in effect or (ii) result in the breach of, or constitute a default or
     require any consent under any indenture or other agreement or instrument to
     which any of the Parent Companies are now a party or by which it or its
     properties may now be bound or affected.

     (a)  Assuming that the Opinion Agreements are executed outside Japan, no
          documentary, stamp or similar tax, imposition or charge need to be
          paid on any Opinion Agreement in Japan.

     (b)  No documentary, stamp or similar tax, imposition or charge need be
          paid in order to ensure the legality, validity, enforceability or
          admissibility in evidence of a Opinion Agreement in Japan.

     (c)  It is not necessary for the validity or enforceability of the
          obligations of the Parent Companies under the Opinion Agreements to
          file or register or record the Opinion Agreements in any public office
          in Japan.



                                                                  SAKAI & MIMURA

6.   The Opinion Agreements are in proper legal form under the laws of Japan for
     enforcement thereof against the Parent Companies and it is not necessary,
     for the legality, validity, enforceability of or admissibility into
     evidence of the Opinion Agreements that it be filed or recorded with any
     court or other authority in Japan or that any Opinion Agreement be written,
     executed and delivered in Japanese pursuant to the laws of Japan; provided
     that items offered into evidence in a legal proceeding in Japan may require
     a Japanese translation be attached thereto.

7.   The choice of the laws of the State of New York to govern the Opinion
     Agreements is a valid choice of law under the laws of Japan, and a court in
     Japan would uphold such choice of law, in regard to substantive law issues,
     in a suit on such Opinion Agreement in Japan.

8.   Under each Opinion Agreement each Parent Company thereto has validly
     submitted to the jurisdiction of the State of New York for the purposes
     specified therein. A final and conclusive judgment rendered by a State or
     Federal court in the State of New York having jurisdiction and venue over
     each Parent Company, and which is not subject to appeal and is enforceable
     in the United States of America, may be enforced against each Parent
     Company in Japan without a review of the merits, provided that the
     following requirements under Article 118 of the Code of Civil Procedure of
     Japan are met:

     (a)  The foreign court's jurisdiction is allowed by laws and ordinances or
          by treaty;

     (b)  the defeated party has received service (except for service by
          publication of notice or any similar means) of summons or any other
          necessary orders to commence procedures or has responded in the action
          without receiving service thereof;

     (c)  the contents of the judgment and the procedures of the litigation are
          not contrary to the public order or morals of Japan; and

     (d)  there is reciprocity.

9.   An arbitral award will be enforceable in Japan, pursuant to a request for
     and receipt of an enforcement decision made in the competent court in
     Japan, unless any one of the following under Article 45 of the Arbitration
     Law of Japan is applicable (with respect to the grounds described in items
     (a) through (g), this shall be limited to where either of the parties has
     proven the existence of the ground in question):

     (a)  the arbitration agreement is not valid due to limits to a party's
          capacity;

     (b)  the arbitration agreement is not valid for a reason other than limits
          to a party's capacity under the law to which the parties have agreed
          to subject it (or failing any indication thereon, the law of the
          country under which the place of arbitration falls);



                                                                  SAKAI & MIMURA

     (c)  a party was not given notice as required by the provisions of the law
          of the country under which the place of arbitration falls (or where
          the parties have otherwise reached an agreement on matters concerning
          the provisions of the law that do not relate to public policy, such
          agreement) in the proceedings to appoint arbitrators or in the
          arbitral proceedings;

     (d)  a party was unable to defend itself in the arbitral proceedings;

     (e)  the arbitral award contains decisions on matters beyond the scope of
          the arbitration agreement or the claims in the arbitral proceedings;

     (f)  the composition of an arbitral tribunal or the arbitral proceedings
          were not in accordance with the provisions of the law of the country
          under which the place of arbitration falls (or where the parties have
          otherwise reached an agreement on matters concerning the provisions of
          the law that do not relate to public policy, such agreement);

     (g)  according to the law of the country under which the place of
          arbitration falls (or where the law of a country other than the
          country under which the place of arbitration falls was applied to the
          arbitral proceedings, such country), the arbitral award has not yet
          become binding, or the arbitral award has been set aside or suspended
          by a court of such country;

     (h)  the claims in the arbitral proceedings relate to a dispute that cannot
          constitute the subject of an arbitration agreement under the laws of
          Japan; or

     (i)  the content of the arbitral award would be contrary to the public
          policy or good morals of Japan.

10.  Assuming that CT Corporation System has, under the laws of the State of New
     York been duly appointed by the Parent Companies as their agent to receive
     service of process in the State of New York, service of process made on CT
     Corporation System pursuant to such appointment will, under the laws of
     Japan, be considered served personally on the Parent Companies and satisfy
     the condition of Article 118 of the Code of Civil Procedure of Japan in
     regard to a judgment rendered by a New York court.

11.  There is no action, suit or proceeding pending against or affecting either
     Parent Company or any of their properties in any court or before any
     governmental authority in Japan and no existing default by either Parent
     Company under any applicable order, or injunction or decree of any court or
     governmental authority in Japan, in each case that could be expected to
     have a material adverse effect on or that questions the legality, validity
     or enforceability of any of the Opinion Agreements.

12.  Neither of the Parent Companies nor any of their assets have any immunity
     (or rights to claim that they have immunity) from jurisdiction of any court
     or from any legal process (whether through service, notice, attachment
     prior to



                                                                  SAKAI & MIMURA

     judgment, attachment in aid of execution, execution or otherwise).

The opinions expressed above are subject to the following qualifications and
limitations:

(i)  Nothing in this Opinion should be taken as indicating that the remedies of
     specific performance or injunction (being in some instances discretionary
     remedies of the court) would necessarily be available with respect to any
     particular provision of the Opinion Agreements in any particular instance.

(ii) Enforcement of the Opinion Agreements against Parent Companies will be
     subject to (i) applicable bankruptcy, insolvency, moratorium, or other
     similar laws affecting the enforcement of creditor rights generally, (ii)
     laws imposing duties to act in good faith or in a commercially reasonable
     manner, and (iii) laws respecting or affecting the procedural or remedial
     provisions of the Agreement.

This Opinion is provided solely in connection with the Opinion Agreements, in
respect of the matters specifically set out above, and is not to be used in
relation to any other matter or fact situation.

Sincerely yours,
SAKAI & MIMURA


Hideyuki Sakai
Managing Partner



                                  Appendix I-13

                      Form of Opinion of Allen & Overy LLP



                                                                   APPENDIX I-13


To:                                     ALLEN & OVERY LLP
CALYON New York Branch,                 Apollolaan 15
As Administrative Agent under the       1077 AB Amsterdam The Netherlands
Master Participation Agreement
[address to follow]
                                        PO Box 75440
Japan Bank for International            1070 AK Amsterdam The Netherlands
Cooperation,
4-1, Ohtemachi 1 - Chome                Tel  +31 20 674 1000
Chiyoda-ku                              Fax  +31 20 674 1111
Tokyo 100 - 8144
Japan

Sumitomo Mitsui Banking Corporation,
1-2, Yurakucho 1 - Chome
Chiyoda-ku
Tokyo
Japan

The Bank of Tokyo-Mitsubishi, Ltd,
2-7-1, Marunouchi, Chiyoda-ku
Tokyo
Japan

KfW,
[address to follow]

CALYON New York Branch,

The Royal Bank of Scotland plc,
[address to follow]

The Bank of Nova Scotia,
[address to follow]

Mizuho Corporate Bank, Ltd.,
[address to follow]

Amsterdam, [__] September, 2005
Our ref    10023-14195 AMBA:227861.3
           VDS/KHAM

RE:  OPINIONS TO BE PROVIDED IN CONNECTION WITH SMM CERRO VERDE NETHERLANDS B.V.
     AND SUMMIT GLOBAL MANAGEMENT II B.V. FOR THE CERRO VERDE PROJECT FINANCING

Allen & Overy LLP is a limited liability partnership registered in England and
Wales with registered number OC306763. A list of the members of Allen & Overy
LLP and their professional qualifications is open to inspection at our London
office, One New Change, London EC4M 9QQ, and at our Amsterdam office. Any
reference to a partner or compagnon in connection with Allen & Overy LLP should
be regarded as a reference to a member, consultant or employee of Allen & Overy
LLP.

Allen & Overy LLP or an affiliated undertaking has an office in each of:
Amsterdam, Antwerp, Bangkok, Beijing, Bratislava, Brussels, Budapest, Dubai,
Frankfurt, Hamburg, Hong Kong, London, Luxembourg, Madrid, Milan, Moscow, New
York, Paris, Prague, Rome, Shanghai, Singapore, Tokyo, Turin and Warsaw.



Dear Sirs, Madam,

1.   We have acted as legal advisers in the Netherlands to SMM Cerro Verde
     Netherlands B.V. (the SUMITOMO PARTICIPANT) and to Summit Global Management
     II B.V. (SGM and together with the Sumitomo Participant referred to as the
     DUTCH COMPANIES and each a DUTCH COMPANY), (i) in connection with the
     Sumitomo Participant entering into the Transfer Restrictions Agreement
     dated September [_] 2005 between the Sumitomo Participant and the other
     parties thereto as mentioned therein (the TRANSFER RESTRICTIONS AGREEMENT),
     (ii) the Dutch Companies entering into the Consent and Agreement dated
     September [_] 2005 between the Dutch Companies and the other parties
     thereto as mentioned therein (the CONSENT), and (iii) the Sumitomo
     Participant entering into the Share Pledge Agreement dated September [__]
     2005 between the Sumitomo Participant and the other parties thereto as
     mentioned therein (the SHARE PLEDGE). The Transfer Restrictions Agreement,
     the Consent and the Share Pledge are herein collectively referred to as the
     AGREEMENTS and individually as an AGREEMENT. Capitalised terms defined in
     the Agreements have the same meaning when used in this opinion unless the
     context requires otherwise.

2.   We have examined:

     (a)  a copy of the executed Agreements;

     (b)  a copy of an excerpt of the registration of the Sumitomo Participant
          in the relevant Trade Register (the TRADE REGISTER) dated 20 September
          2005 and confirmed by telephone by the Trade Register to be correct on
          the date hereof (the SUMITOMO PARTICIPANT EXCERPT);

     (c)  a copy of the articles of association (statuten) of the Sumitomo
          Participant dated 23 May 2005 as, according to the Excerpt, deposited
          with the Trade Register as being in force on the date hereof (the
          SUMITOMO PARTICIPANT ARTICLES);

     (d)  a copy of the deed of incorporation (akte van oprichting) of the
          Sumitomo Participant dated 21 April 2005 (the SUMITOMO PARTICIPANT
          DEED OF INCORPORATION);

     (e)  a copy of an excerpt of the registration of SGM in the relevant Trade
          Register (the TRADE REGISTER) dated 20 September 2005 and confirmed by
          telephone by the Trade Register to be correct on the date hereof (the
          SGM EXCERPT and together with the Sumitomo Participant Excerpt the
          EXCERPTS);

     (f)  a copy of the articles of association (statuten) of SGM dated 30 March
          2004 as, according to the Excerpt, deposited with the Trade Register
          as being in force on the date hereof (the SGM ARTICLES and together
          with the Sumitomo Participant Articles the ARTICLES);



     (g)  a copy of the deed of incorporation (akte van oprichting) of SGM dated
          24 April 2003 (the SGM DEED OF INCORPORATION and together with the
          Sumitomo Participant Deed of Incorporation the DEEDS OF INCORPORATION
          and each a DEED OF INCORPORATION);

     (h)  a copy of a written resolution of the management board (bestuur) of
          the Sumitomo Participant dated [_] (the SUMITOMO PARTICIPANT BOARD
          RESOLUTION);

     (i)  a copy of a written resolution of the management board (bestuur) of
          SGM dated [_] (the SGM BOARD RESOLUTION);

     (j)  a copy of the executed power of attorney issued by the Sumitomo
          Participant dated [_] authorising G.A.J.S. Ratti, J.P.C. Cunza, E.L.L.
          Sandoval and L.E.P. Cisneros acting individually to execute and
          deliver the Share Pledge Agreement on behalf of the Sumitomo
          Participant (the SHARE PLEDGE POWER OF ATTORNEY);

     We have not examined any other agreement, deed or document entered into by
     or affecting the Dutch Companies or any other corporate records of the
     Dutch companies and have not made any other inquiry concerning it.

3.   We assume:

     (a)  the genuineness of all signatures;

     (b)  the authenticity and completeness of all documents submitted to us as
          originals and the completeness and conformity to originals of all
          documents submitted to us as copies;

     (c)  that the documents referred to in paragraph 2 above (other than the
          Agreements) were at their date, and have through the date hereof
          remained, accurate and in full force and effect and that the
          Agreements have through the date hereof remained in existence in the
          form in which they were presented to us;

     (d)  that each Deed of Incorporation is a valid notarial deed (authentieke
          akte), the contents thereof were correct and complete as of the date
          thereof and there were no defects in the incorporation of each Dutch
          Company (not appearing on the face of each Deed of Incorporation) on
          the basis of which a court might dissolve each Dutch Company or deem
          it never to have existed;

     (e)  that each Dutch Company has not been dissolved (ontbonden), granted a
          moratorium (surseance verleend) or declared bankrupt (failliet
          verklaard) (although not constituting conclusive evidence thereof,
          this assumption is supported by (i) the contents of the Excerpts and
          (ii) information obtained by telephone today from the insolvency
          office (afdeling insolventie) of the court in Amsterdam);


                                        2



     (f)  that the general meeting of shareholders of the Sumitomo Participant
          has not submitted any resolutions of the management board to its
          approval pursuant to Article 16(1) of the Sumitomo Participant
          Articles and that the general meeting of shareholders of SGM has not
          submitted any resolutions of the management board to its approval
          pursuant to Article 11(4) of the SGM Articles; we note that if any
          such approval were required but not given, this will not affect the
          legality, validity, binding effect or enforceability of the Agreements
          as executed by the Dutch Companies;

     (g)  that the Share Pledge Power of Attorney has been executed and
          delivered on behalf of the Sumitomo Participant by Ichiro Abe and that
          the Share Pledge has been executed and delivered by any one of the
          following: G. A. J. S. Ratti, J. P. C. Cunza, E. L. L. Sandoval and L.
          E. P. Cisneros;

     (h)  that the Agreements other than the Share Pledge have been executed and
          delivered on behalf of the Sumitomo Participant by [_] and on behalf
          of SGM by [_];

     (i)  that the Agreements constitute legal, valid, binding and enforceable
          obligations of the Dutch Companies that are a party thereto in
          accordance with their terms under the law by which they are expressed
          to be governed;

     (j)  that, insofar as any obligation of any Dutch Company under the
          Agreements falls to be performed in, or is otherwise affected by the
          laws of, any jurisdiction other than the laws of the Netherlands, its
          performance would not be illegal or ineffective under the laws of that
          jurisdiction;

     (k)  that any law, other than Dutch law, which may apply to the Share
          Pledge Power of Attorney or to the Agreements (or the transactions
          contemplated thereby) would not be such as to affect any conclusion
          stated in this opinion;

     (l)  that each security right created by the Share Pledge has been validly
          created and can be enforced against each asset described therein as
          security for the payment and performance of the obligations and
          liabilities expressed to be secured thereby under the laws by which it
          is expressed to be governed;

     (m)  that at the time a security right becomes effective pursuant to the
          Share Pledge, title to each asset which is made subject to that
          security right is held by the Sumitomo Participant;

     (n)  that each Dutch Company has its centre of main interests within the
          meaning of the Council Regulation (EC) No. 1346/2000 of 29 May 2000 on
          Insolvency Procedures (the REGULATION) in the Netherlands and that it
          has not been subjected to any one or more of the insolvency and
          winding-up proceedings listed in Annex A or Annex B to the Regulation
          in any EU Member State, other than the Netherlands, on the date of
          execution of the Agreements;


                                        3



4.   This opinion is limited to the laws of the Netherlands currently in force
     (unpublished case law not included) excluding tax law (except as
     specifically referred to herein), the laws of the EU (insofar as not
     implemented in Dutch law or directly applicable in the Netherlands) and
     competition or procurement laws.

     We express no opinion as to matters of fact. We assume that there are no
     facts not disclosed to us which would affect the conclusions in this
     opinion.

     This opinion is limited to the Agreements and the matters contemplated
     therein and does not relate to any other agreement or matter. Nothing in
     this opinion should be taken as expressing an opinion in respect of any
     representation, warranty or other statement contained in the Agreements.

5.   Based on the foregoing and subject to the qualifications set out below, we
     are of the opinion that:

     (a)  STATUS

          Each Dutch Company is duly incorporated and validly existing as a
          private company with limited liability (besloten vennootschap met
          beperkte aansprakelijkheid) under Dutch law.

     (b)  POWERS AND AUTHORITY

          Each Dutch Company has the corporate power and authority to enter
          into, incur and perform the obligations expressed to be assumed by it
          under each Agreement to which it is a party and has taken all
          necessary corporate action to authorise the execution and delivery of
          such Agreement. The Sumitomo Participant has all requisite power and
          authority to own its assets and conduct its business as set out in the
          objects and purposes clause of the Sumitomo Participant Articles. The
          Sumitomo Participant has the corporate power and authority to issue
          the Share Pledge Power of Attorney and has taken all necessary
          corporate action to authorise the execution and delivery of such Share
          Pledge Power of Attorney.

     (c)  DUE EXECUTION

          Each Agreement has been duly authorised, executed and delivered by the
          Dutch Company that is a party thereto. The Share Pledge Power of
          Attorney has been duly authorised, executed and delivered by the
          Sumitomo Participant.

     (d)  APPLICATION OF PROPER LAW

          The choice of law as contained in the Agreements would be upheld as a
          valid choice of law by Dutch courts and applied by those courts in
          proceedings in relation to the Agreements as the governing law
          thereof, except (i) to the extent that any term of an Agreement or any
          provision of the law applicable to that Agreement is manifestly
          incompatible with Dutch public policy and (ii) that


                                        4



          mandatory provisions of Dutch law may be given effect if and insofar
          as, under Dutch law those provisions must be applied irrespective of
          the chosen law.

     (e)  LEGAL VALIDITY

          Subject to the opinion given under (d) above, each of the Agreements
          constitutes a legal, valid, binding and enforceable obligation of each
          Dutch Company in accordance with its terms and each Agreement is in
          proper form for its enforcement in Dutch courts.

     (f)  NON-CONFLICT WITH LAWS

          The execution by each Dutch Company of each Agreement to which it is a
          party does not and its performance of such Agreement will not (i)
          conflict with or result in a violation of any provision of the
          relevant Articles or the provisions of any published law, rule or
          regulation of general application of the Netherlands, and (ii) result
          in, or require the creation or imposition of, any lien, charge or
          encumbrance (other than under the Agreements) on any of its properties
          or revenues by operation of any law, rule or regulation referred to
          (i) above.

     (g)  CONSENTS

          No authorisations, approvals, consents, licences, exemptions, filings,
          registrations, notarisations or other requirements of governmental,
          judicial or public bodies or authorities of or in the Netherlands are
          required in connection with each Dutch Company's entry into or
          performance of the Agreements to which it is a party or for its
          validity or enforceability against the relevant Dutch Company, except
          for notice requirements to the Dutch Central Bank pursuant to the Act
          on Foreign Financial Relations (Wet financiele betrekkingen
          buitenland) 1994 and regulations promulgated thereunder. Failure to
          observe these requirements does not affect the validity or
          enforceability of the Agreements.

     (h)  PARI PASSU RANKING

          The obligations of each Dutch Company under the Agreements to which it
          is a party will rank at least pari passu with all its other unsecured
          obligations other than those preferred by statute, and with the
          exception of any rights of set-off or counterclaim which may be
          asserted by or against each Dutch Company.

     (i)  STAMP DUTIES

          No stamp or registration fee or duty or similar taxes or charges are
          payable in the Netherlands in connection with the execution or
          enforcement of the Agreements.

     (j)  NO IMMUNITY


                                        5



          Each Dutch Company is subject to civil and commercial law with respect
          to its obligations under the Agreements to which it is a party, the
          entry into and performance of the Agreements to which it is a party by
          the relevant Dutch Company constitute private and commercial acts and
          neither of the Dutch Companies nor any of its assets located in the
          Netherlands enjoys any right of immunity from set-off, suit,
          attachment prior to judgment, execution or other legal process in
          respect of its obligations under the Agreements to which it is a
          party.

     (k)  SUBMISSION TO JURISDICTION

          The submission to jurisdiction by the Dutch Companies contained in the
          Agreements is valid and binding on the Dutch Companies and not subject
          to revocation. This submission does not preclude that claims for
          provisional measures in summary proceedings may be brought before a
          competent Dutch court.

     (l)  ENFORCEMENT OF FOREIGN JUDGMENTS

          There is no treaty between the United States of America and the
          Netherlands regarding the recognition and enforcement of judicial
          decisions. There is also no such treaty between Peru and the
          Netherlands. In the absence of such treaties,, a judgement rendered by
          a court in New York County in the City of New York or by a court in
          Lima-Cercado will not be enforced by Dutch courts. In order to obtain
          a judgement which is enforceable in the Netherlands, the claim must be
          relitigated before a competent Dutch court. If and to the extent that
          the Dutch court finds that the jurisdiction of the relevant foreign
          courts has been based on grounds which are internationally acceptable
          and that proper legal procedures have been observed, the Dutch court
          would, in principle, give binding effect to the final judgement of the
          relevant foreign courts unless such judgement contravenes principles
          of Dutch public policy.

     (m)  NO RESIDENCY

          It is not a condition to the ability of any Secured Party to bring a
          legal action in a Dutch court against the Dutch Companies in respect
          of any Agreement that such Secured Party has complied with any
          requirements in the Netherlands necessary to enable it to do or carry
          on business in the Netherlands. The Secured Parties are not and will
          not be deemed resident, carrying on business, subject to taxation as
          such or subject to environmental liability in the Netherlands solely
          by reason of the execution, delivery, performance or enforcement of
          any of the Agreements to which they are a party.

     (n)  APPOINTMENT OF AGENT


                                        6



          Assuming that CT Corporation System has, under the laws of the State
          of New York, been duly appointed by the Dutch Companies as their agent
          to receive service of process in the State of New York, service of
          process made on CT Corporation System pursuant to such appointment
          will, under the laws of the Netherlands, be considered served
          personally on the Dutch Companies for the purpose of proceedings in
          the State of New York if such service of process has been validly made
          under the law of the State of New York.

     (o)  PROPER FORM

          Each of the Agreements is in proper legal form under the laws of the
          Netherlands for the enforcement thereof in accordance with its terms
          against the Dutch Companies and, to ensure the legality,
          enforceability and admissibility in evidence of each of the Agreements
          in the Netherlands, it is not necessary that any of the Agreements or
          any other documents be filed or recorded with any court or other
          authority in the Netherlands or that any stamp or similar tax be paid
          on or in respect of any of the Agreements or that any of the
          Agreements be written, executed and delivered in Dutch pursuant to the
          laws of the Netherlands.

6.   This opinion is subject to the following qualifications:

     (a)  This opinion is limited by all bankruptcy (faillissement), moratorium
          (surseance van betaling), fraudulent conveyance (Actio Pauliana) or
          similar laws affecting creditors' rights generally, provided that the
          security rights created by the Share Pledge Agreement will not be
          affected by a bankruptcy or moratorium of the Sumitomo Participant
          except as set forth in qualifications (b), (c) and (d) below.

     (b)  Under the Dutch Bankruptcy Code, a receiver in bankruptcy can require
          the holder of a security right in an asset which forms part of the
          bankrupt estate to foreclose such security right within a reasonable
          period of time. If that holder fails to do so, the receiver may sell
          the assets himself, in the manner provided for in the Dutch Bankruptcy
          Code. In the latter case, the holder of the security right concerned
          may only realise its claim by submission thereof in the bankruptcy and
          will receive payment, if any, only through distribution of the
          proceeds of that sale less the holder's share in the bankruptcy costs
          and subject to the satisfaction of higher ranking claims of creditors.
          Furthermore, under the Dutch Bankruptcy Code, foreclosure by the
          holder of a security right in an asset which forms part of or which is
          in the control of the bankrupt estate or which is owned or controlled
          by a company which has been granted a moratorium, as the case may be,
          may be prevented by the bankruptcy judge (in case of bankruptcy) or by
          the court (in case of a moratorium), in each case for a maximum period
          of four months.

     (c)  The validity of the Share Pledge Agreement may be affected by the
          provisions of section 42 of the Dutch Bankruptcy Code. These
          provisions grant to the receiver in bankruptcy of a company the right
          to challenge the validity of a security right granted by that company
          if (i) that security right is granted by the company


                                        7



          without a legal obligation to do so, (ii) the rights of the creditors
          (including future creditors) are thereby prejudiced and (iii) there is
          knowledge on the part of the company and the party to which or for
          whose benefit the security right is granted that the rights of the
          creditors would be prejudiced thereby).

     (d)  Under Dutch bankruptcy law, assets that are acquired or come into
          existence after bankruptcy or moratorium of the Sumitomo Participant,
          may not be subject to the security rights created by the Share Pledge
          Agreement and will therefore form part of the bankrupt estate. A right
          that is exercisable or a receivable that becomes due and payable after
          bankruptcy or moratorium will only be deemed to exist prior to the
          bankruptcy or moratorium if it is not subject to an act of the
          creditor or debtor thereof.

     (e)  As used in this opinion, the term ENFORCEABLE means that the
          obligations referred to are of a type enforced by Dutch courts. It is
          not certain, however, that each such obligation will be enforced in
          accordance with its terms in every circumstance, the enforcement being
          subject, inter alia, to the nature of the available remedies. We do
          not express any opinion as to whether specific performance or
          injunctive relief would be available in respect of any obligations of
          each Dutch Company under the Agreements to which it is a party.

     (f)  The enforcement in the Netherlands of the Agreements and foreign
          judgments will be subject to the rules of civil procedure as applied
          by Dutch courts.

     (g)  A Dutch court may decline jurisdiction if concurrent proceedings are
          being brought elsewhere.

     (h)  Under Dutch law, each power of attorney (volmacht) or mandate
          (lastgeving), whether or not irrevocable, granted by each Dutch
          Company in the Agreements, will terminate by force of law and without
          notice, upon bankruptcy of each Dutch Company and cease to have effect
          upon each Dutch Company having been granted a moratorium. The
          foregoing applies to any appointment of a service of process agent by
          the Dutch Companies.

     (i)  Generally with respect to the enforcement by Dutch courts of security
          rights created under a law other than Dutch law (hereafter to be
          referred too as FOREIGN SECURITY RIGHTS), there is no conclusive case
          law in the Netherlands. The foreclosure and ranking of security rights
          and preferred rights in the Netherlands will be subject to Dutch law
          which has a fixed system and mandatory ranking of those rights.

          Provided that a foreign security right has been validly created and is
          enforceable under the law by which it is expressed to be governed and
          complies with the Dutch conflict of laws rules as set out below and
          subject to (i) the exceptions to the validity of a choice of law as
          set forth in our opinion contained in paragraph 5, sub-paragraph (d),
          and (ii) the other qualifications contained in this opinion,


                                        8



          that foreign security right will be recognised in the Netherlands. If
          recognised, the foreign security right will be enforced, and have the
          same ranking, as the Dutch security right which, in content and
          purpose, most closely resembles it. This means that the secured party
          may not have more rights than it would have had if Dutch law had
          governed the security right concerned. We therefore do not opine on
          the enforceability in the Netherlands of the remedies afforded to the
          secured party and the powers and discretions awarded to a receiver, if
          any, in respect of a foreign security right under the law governing
          that right.

          Under Dutch conflict of laws rules a security right in a registered
          share in a company must constitute a legal, valid, binding and
          enforceable security right under the laws of the jurisdiction under
          which that company is incorporated.

7.   In this opinion, Dutch legal concepts are expressed in English terms and
     not in their original Dutch terms. The concepts concerned may not always be
     identical to the concepts described by the English terms as such terms may
     be understood under the laws of other jurisdictions. This opinion is given
     on the express basis, accepted by each person who is entitled to rely on
     it, that this opinion and all rights, obligations or liability in relation
     to it are governed by Dutch law and that any action or claim in relation to
     it can only be brought exclusively before the courts of Amsterdam, the
     Netherlands.

8.   This opinion is given exclusively in connection with the Agreements and for
     no other purpose. This opinion is given for the sole benefit of its
     addressees and may not be relied upon by any other person without our prior
     written consent.

Yours faithfully,

- ------------------------------------
Allen & Overy


                                        9



                                  Appendix I-14

            Form of Opinion of Estudio Aurelio Garcia Sayan, Abogados



                                                                   APPENDIX I-14

                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

FRANCISCO MOREYRA GARCIA SAYAN                AURELIO GARCIA SAYAN
PEDRO GASTANETA GONZALES                          (1902 - 1997)
JOSE MIGUEL MORALES DASSO
ALFREDO GASTANETA ALAYZA                      AV. EL ROSARIO No 380
LUIS GASTANETA ALAYZA                         LIMA 27, PERU
OSCAR GASTANETA ALAYZA                        TELEFS.: (51-1) 440-7341 441-5157
MANUEL GASTANETA CARRILLO DE ALBORNOZ         FAX: (51-1) 440-5218 440-6393
AGUSTIN YRIGOYEN GONZALEZ DEL RIEGO           lgastaneta@garciasayan.com.pe
DIEGO CALMET MUJICA                           www.garciasayan.com.pe
ALBERTO VARILLAS CUETO
JAIME DURAND PLANAS                           MEMBER OF MERITAS
JUAN PEDRO PORTARO CAMET
ROSIE GADEA BENAVIDES
ROSSANA RODRIGUEZ RUIZ
DIEGO GRISOLLE FONTANA
SHIRLEY CARDENAS CHAMOCHUMBI
GONZALO RAFFO MONCLOA
AISSA PAREDES LEON

                                                     [__________________], 2005.


To: Japan Bank for International Cooperation
    KfW
    CALYON New York Branch
    The Royal Bank of Scotland plc
    The Bank of Nova Scotia
    Mizuho Corporate Bank, Ltd.
    Sumitomo Mitsui Banking Corporation
    The Bank of Tokyo-Mitsubishi

Ladies and Gentlemen:

     We have acted as Peruvian counsel to Compania de Minas Buenaventura S.A.A.
("Buenaventura") in connection with (i) the Completion Guarantee dated as of
September [30], 2005 (the "Completion Guarantee") among Sumitomo Metal Mining
Co., Ltd. ("SMM"), Buenaventura, Phelps Dodge Corporation ("PDC"), Japan Bank
for International Cooperation ("JBIC"), Sumitomo Mitsui Banking Corporation
("Sumitomo Mitsui"), The Bank of Tokyo-Mitsubishi, Ltd. ("BOT-M"), KfW, CALYON
New York Branch ("CALYON"), The Royal Bank of Scotland plc ("RBS"), The Bank of
Nova Scotia ("Scotia Capital") and Mizuho Corporate Bank, Ltd. ("Mizuho"); (ii)
the Share Pledge Agreement dated as of September 30, 2005 (the "Share Pledge
Agreement")



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -2-


among SMM Cerro Verde Netherlands B.V. ("Sumitomo"), Buenaventura, Cyprus Climax
Metals Company ("Cyprus") and Citibank del Peru S.A. ("Citibank-Peru"); (iii)
the Transfer Restrictions Agreement dated as of September 30, 2005 (the
"Transfer Restrictions Agreement") among Sumitomo, Buenaventura, Cyprus, SMM,
SC, PDC, JBIC, Sumitomo Mitsui, BOT-M, KfW, CALYON, RBS, Scotia Capital and
Mizuho; (iv) the Shareholders Agreement dated as of June 1, 2005 (the
"Shareholders Agreement") among Sumitomo, SMM, SC, Summit Global Management B.V.
("Summit"), Buenaventura, Cyprus, PCD and Sociedad Minera Cerro Verdi S.A.A.
("Cerro Verde"); and (v) the Consent and Agreement dated as of September 30,
2005 (the "Consent") among Sumitomo, SMM, SC, Summit, Buenaventura, Cyprus, PCD
and Cerro Verde. The Completion Guarantee, the Share Pledge Agreement, the
Shareholders Agreement, the Consent and the Transfer Restrictions Agreement are
hereinafter called, jointly, the "Financing Agreements". Capitalized terms used
herein and not otherwise defined herein, shall have the meanings assigned to
such terms in the Completion Guarantee.

     In connection with the opinions hereinafter expressed, we have examined
originals or copies, whether certified or not, of such all public and corporate
records, resolutions, certificates and other documents and approvals of
Buenaventura as we have considered necessary or appropriate in rendering this
opinion.

     In our examination, we have assumed the legal capacity of all individuals
executing the Financing Agreements, the genuineness of all signatures and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon representations made in or pursuant to the Financing Agreements.

     In giving the opinions below, we have further assumed (without
investigation on our part):

     (i)  the due organization and valid existence under the laws of its
          jurisdiction of incorporation of each of the parties to the Financing
          Agreements, except Buenaventura;

     (ii) each of the parties to the Financing Agreements, other than
          Buenaventura, has full power and authority to execute and deliver the
          Financing Agreements; and

     (iii) the execution and delivery of the Financing Agreements and the
          performance by the parties thereto, other than Buenaventura, of their
          obligations thereunder have been duly authorized by all requisite
          action and the Financing Agreements are valid, binding and enforceable
          under



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -3-


          the laws of each jurisdiction in which any obligations thereunder are
          to be performed or in which any party thereto has been formed or
          organized.

     Based upon the foregoing, having regard to legal considerations we deem
relevant and subject to the qualifications, limitations and assumptions set
forth herein, we are of the opinion that insofar as the laws of Peru are
concerned:

     (1)  Buenaventura is a sociedad anonima abierta duly organized, validly
          existing and in good standing under the laws of Peru which has all
          requisite power and authority to own its property and to conduct its
          businesses as it is currently being conducted.

     (2)  Buenaventura has full power and authority to (i) enter into each of
          the Financing Agreements, (ii) incur and perform the obligations
          therein contained and (iii) grant to the Secured Parties the security
          interests in its property purported to be covered by the Share Pledge
          Agreement.

     (3)  There is no provision of any treaty, law, statute, regulation, rule,
          order or decree in or of Peru or any political subdivision thereof,
          nor award, decree or judgment of any court or governmental authority
          of competent jurisdiction to which Buenaventura is subject, and no
          provision of the organizational deed and bylaws of Buenaventura, (i)
          which would prohibit, conflict with or in any way prevent the
          execution, delivery or performance by Buenaventura of any of the
          Financing Agreements or which would result in the creation or
          imposition under the laws of Peru of any lien, security interest,
          charge or encumbrance of any nature upon any property of Buenaventura
          (except those created pursuant to the Share Pledge Agreement), (ii)
          that violate or conflict with, constitute (with notice or lapse of
          time, or both) a default under, or result in a breach of, any
          indenture, mortgage, lien, material agreement or other material
          contracts to which Buenaventura is a party or (iii) that violate or
          result in a breach of any of the terms, conditions or provisions or
          any order of any court arbitrator or governmental authority or
          regulatory body or Peru or contravene any law or regulation of Peru;
          except for application of Article 254 of the General Corporations Law
          (Ley General de Sociedades No 26887) under which any agreement
          regarding restrictions to the transfer of shares issued by a company
          organized as a sociedad anonima abierta will not be enforceable
          against such issuer.

     (4)  Each of the Financing Agreements has been duly authorized, executed
          and delivered by Buenaventura and constitutes the valid and legally
          binding obligation of Buenaventura enforceable against Buenaventura in
          accordance with its terms, except for (i) limitations that may arise
          from



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -4-


          bankruptcy, insolvency, moratorium, reorganization, fraudulent
          conveyance or other similar laws that affect the rights of creditors
          generally; and (ii) application of Article 2049 of the Peruvian Civil
          Code under which provisions of a foreign law shall be excluded if they
          are incompatible with international public order or good customs.

     (5)  All authorizations, approvals, consents, filings, registrations and
          recordations that are necessary or advisable with respect to (i) the
          execution, delivery and performance of each Financing Agreement by
          Buenaventura, (ii) the validity or enforceability in Peru of the
          obligations of Buenaventura under any of the Financing Agreements and
          (iii) the admissibility in evidence in a court in Peru of the
          Financing Agreements have been made, and all stamp and other duties or
          taxes required to be paid thereon have been paid, except for the
          admissibility in evidence of the Completion Guarantee and the Transfer
          Restrictions Agreement, where the procedure described in paragraph
          (12) below shall have to be followed. No further authorization or
          approval of other action by, and no notice to or filing with, any
          Peruvian governmental authority or any third party is required under
          the laws of Peru for the execution, delivery or performance by
          Buenaventura of any of the Financing Agreements.

     (6)  The Share Pledge Agreement has been executed through a notarized
          Peruvian public deed and registered in the Share Pledge Registry
          (Matricula de Acciones) of Sociedad Minera Cerro Verde S.A.A or the
          Account Annotation (Anotacion en Cuenta) in CAVALI, as the case may
          be, creating a valid and fully perfected first ranking security
          interest upon the property purported to be covered thereby as security
          for the payment in full of the Secured Obligations, subject to no
          other equal or prior mortgages, pledges, liens, security interests,
          rights of reversion, assignments or other encumbrances or rights of
          others whatsoever enforceable in Peru against Buenaventura, any
          attaching creditor and third parties, except limitations that may
          arise from bankruptcy, insolvency, moratorium, reorganization,
          fraudulent conveyance and or other similar laws that affect the rights
          of creditors generally. No further approval, consent, authorization,
          notarization or other formality in Peru, and no notice to or filing
          with any Peruvian governmental authority or any third party, is
          required to be obtained or accomplished, and no fee, duty or tax is
          required to be paid, for the maintenance, preservation and continued
          perfection and first priority nature of such security interest and
          lien, or the remedies in respect of the collateral pursuant to the
          Share Pledge Agreement, except obligations that are mandatorily
          preferred by law, such as labour obligations.



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -5-


     (7)  The choice of the law of the State of New York, United States of
          America, set forth in Section 9.05 of the Completion Guarantee,
          Section 4.03 of the Transfer Restrictions Agreement and Section 5(d)
          of the Consent are legal, valid and binding, and will be recognized
          and enforced by the Peruvian Courts, provided it is not incompatible
          with international public order or good customs.We have no reason to
          believe that any of the obligations under the Completion Guarantee,
          the Transfer Restrictions Agreement and the Consent are contrary to
          international public order or good customs, nor to Peruvian public
          policy (including public conduct and good morals) or any international
          treaties binding upon Peru or any of the generally accepted principles
          of international law.

     (8)  The submission by Buenaventura to the non-exclusive jurisdiction of
          any Federal or State Court located in New York County in the City of
          New York, United States of America, set forth in Section 9.13(a) of
          the Completion Guarantee, Section 4.08(a) of the Transfer Restrictions
          Agreement and Section 5(d) of the Consent with respect to matters
          arising under or in connection with the Completion Guarantee, the
          Transfer Restrictions Agreement and the Consent is valid and effective
          under the laws of Peru, provided that such submission is not an abuse
          of law, is not contrary to Peruvian public order and the matter being
          submitted to such foreign Court is not subject to the exclusive
          jurisdiction of Peruvian Courts. In our opinion, the submission of the
          Completion Guarantee, Transfer Restrictions Agreement and the Consent
          to the non-exclusive jurisdiction of the Federal or State Courts
          located in the New York County in the City of New York is not an abuse
          of law, is not contrary to Peruvian public order and the matters
          therein referred are not subject to the exclusive jurisdiction of
          Peruvian Courts. However, if a claim is filed in a Peruvian Court, it
          could be disallowed by such Court upon request of the defendant if a
          claim on the same matter has been filed previously in a Federal or
          State Court located in the New York County in the city of New York, to
          avoid simultaneous or concurrent procedures and the risk of having
          different judgments on the same matter.

     (9)  Assuming that CT Corporation System has, under the laws of the State
          of New York, been duly appointed by Buenaventura as its agent to
          receive service of process in the State of New York, service of
          process made on CT Corporation System pursuant to such appointment
          will, under the laws of Peru, be considered served personally on
          Buenaventura and satisfy the conditions of Peruvian law.

     (10) A final judgment against Buenaventura for the payment of money
          obtained in any Court located in the New York County in the City of
          New York



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -6-


          ("New York"), would be recognized, conclusive and enforceable in the
          Courts of Peru without reconsideration on the merits, so long as the
          following conditions are met:

     (1) if there is any treaty for the enforcement of judgments between Peru
     and the United States of America, the provisions of such treaty will apply;
     (2) in the absence of such treaty, the reciprocity principle is applicable,
     pursuant to which a judgment given by the Courts of New York will be
     admissible in the Courts of Peru and will be enforceable thereby, except if
     according to the laws of New York as interpreted or applied by the Courts
     of New York (i) judgments issued by Peruvian Courts are not admissible in
     the Courts of New York or (ii) judgments issued by Peruvian Courts are
     subject to reexamination by the Courts of New York, such reciprocity being
     presumed under the laws of Peru (3) in either case: (i) such judgment does
     not resolve matters which are subject to the exclusive jurisdiction of
     Peruvian Courts; (ii) the Courts of New York is the competent jurisdiction
     under its own conflict of law rules and general principles of procedural
     jurisdiction; (iii) the defendant against whom the enforcement is sought
     has been summoned in accordance with the laws of New York and a reasonable
     term to appear before the Court as well as the procedural guarantees to
     defend his case were granted to the defendant in accordance with the laws
     of New York; (iv) the judgment has the authority of res judicata under the
     laws of New York; (v) there are no pending legal proceedings between the
     same parties related to the same matter, started prior to the filing of the
     complaint that concluded with the judgment issued by the Courts of New
     York; (vi) such judgment is not incompatible with another judgment meeting
     the admissibility and enforceability requirements required by Peruvian law,
     previously issued in respect of the same subject matter; and (vii) such
     judgment is not contrary to public order and good customs.

     (11) The submission by Buenaventura to the arbitration in accordance with
          the UNCITRAL Arbitration Rules set forth in Section 9.16(a) of the
          Completion Guarantee for the resolution of any dispute on the matters
          expressly stated in such Section is valid and effective under the
          Arbitration General Law No. 26572 (Ley General de Arbitraje) and shall
          be enforceable in Peru without reconsideration of the merits.

     (12) To ensure the enforceability or admissibility in evidence in Peru of
          any document executed or granted outside Peru, including any document
          containing a judgment issued by the Courts of a place outside Peru,
          such document must be authenticated before the competent Consul of
          Peru and before the Ministry of Foreign Affairs in Peru. In addition,
          any document



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -7-


          written in any language other than Spanish must be officially
          translated into Spanish by an official public translator in Peru prior
          to its submission for consideration of any Peruvian authority or its
          admission as evidence in any Courts of Peru, and such official Spanish
          translation would prevail over its original version.

     (13) There are no procedural bars to prevent the commencement of a
          proceeding against Buenaventura by a party to a Financing Agreement in
          a court of competent jurisdiction in Peru, pursuant to the terms of
          each Financing Agreement and based upon its obligations under a
          Financing Agreement and such courts would be prepared to accept
          jurisdiction over any such action or proceeding, except that a court
          in Peru may decline to accept jurisdiction over an action or
          proceeding based on the principle of forum non conveniens as it is
          applied in Peru or based upon proceedings brought on the same cause of
          action in another jurisdiction and subject to Section 12.16(a) of the
          Master Participation Agreement, Section 9.13(a) of the Completion
          Guarantee, Section 4.08(a) of the Transfer Restrictions Agreement,
          Section 5 of the Consent and Section 14.2 of the Share Pledge
          Agreement.

     (14) There are no actions, suits or proceedings including arbitral duly
          served against, or to our knowledge (after due inquiry) threatened
          against or affecting Buenaventura or any of its assets that could
          reasonably be expected to materially and adversely affect its ability
          to perform any of its obligations under the Financing Agreements or
          that question the legality, validity and enforceability of the
          Financing Agreements. Buenaventura is not in default with respect to
          any order, judgment or decree of any governmental authority or
          regulatory body or any arbitrator in Peru in a manner or to an extent
          that could reasonably be expected to have such an effect and there are
          no orders, judgments or decrees of any governmental authority,
          regulatory body or any arbitrator in Peru outstanding against
          Buenaventura or affecting its assets that could reasonably be expected
          to materially and adversely affect its ability to perform any of its
          obligations under the Financing Agreements.

     (15) The obligations of Buenaventura under each of the Financing Agreements
          rank pari passu with or senior to, in right of the payment, with all
          other unsecured and unsubordinated obligations of Buenaventura, except
          obligations that are mandatorily preferred by law.

     (16) Buenaventura is subject to civil and commercial law with respect to
          its obligations under each of the Financing Agreements, and the making
          and performance by it of such Financing Agreements constitute private
          and



                                     ESTUDIO
                              AURELIO GARCIA SAYAN
                                    ABOGADOS

                                       -8-


          commercial acts, rather than governmental or public acts. Neither
          Buenaventura nor any of its respective assets or properties has in
          Peru any immunity from jurisdiction of any court or from any legal
          process in Peru (whether through service, notice, attachment prior to
          judgment, attachment in aid of execution, execution or otherwise).

     (17) It is not a condition to the ability of any Secured Party to bring a
          legal action in the courts of Peru against Buenaventura in respect of
          any Financing Agreement that such Secured Party has complied with any
          requirements in Peru necessary to enable it to do or carry on business
          in Peru. The Secured Parties are not and will not be deemed resident,
          carrying on business, subject to taxation as such or subject to
          environmental liability in Peru solely by reason of the execution,
          delivery, performance or enforcement of any of the Financing
          Agreements to which they are a party.

     (18) As of the date of this Legal opinion, Buenaventura owns [include
          number of shares] of the Borrower, all of which are free and clear
          form any pledge, lien or encumbrance, other than the Share Pledge
          Agreement and the Transfer Restriction Agreement.

     We are attorneys duly qualified to practice law in Peru and we express no
opinion herein as to any laws other than the laws of Peru as in effect on the
date hereof.

     This opinion is furnished to you solely in connection with the transactions
described above and may not be relied upon by anyone other than you and your
counsel in connection with such transactions.

                                        Very truly yours,

                                        ----------------------------------------
                                        Gonzalo Raffo Moncloa



                                                                     APPENDIX II

                                    INSURANCE

(A)  Insurance by the Borrower: The Borrower shall procure or cause another
     Person to procure at Borrower's own expense and maintain in full force and
     effect at all times on and after the Closing Date (unless otherwise
     specified below) and continuing throughout the term of this Agreement
     (unless otherwise specified below) insurance policies with insurance
     companies (i) having a Best Insurance Reports rating of "A-" or better and
     an financial size category of "VIII" or higher, or (ii) having a Standard &
     Poor's financial strength rating of "BBB+" or higher, or (iii) reasonably
     acceptable to the Administrative Agent, or (iv) of sound financial standing
     and good repute which does not meet any of above subsections (i), (ii) or
     (iii), subject to such insurers not constituting more that 10% of the total
     amount at risk on any one policy. Such insurance policies shall contain
     limits and coverage provisions sufficient to satisfy the requirements set
     forth in each of the Project Documents, but in no event less than the
     limits and coverage provisions set forth below. If an insurance company
     cannot meet the requirements of the above subsections (i), (ii) or (iv),
     the Administrative Agent may require that all or part of the risk be
     reinsured and that an agreement be in effect that allows the Borrower or
     Senior Facility Lenders direct access to any reinsurers for direct payment
     of premiums and losses; provided that, the provisions of any such
     reinsurance, including the rights of the Senior Facility Lenders and any
     limitation on the rights of the Borrower or Senior Facility Lenders, with
     regard to the reinsurers, shall be subject to the approval of the
     Administrative Agent (which approval shall not be unreasonably withheld)
     and (vi) any such reinsurers shall also be subject to the same financial
     approval standards as outlined above in subsections (i), (ii) and (iv).

     (1)  General Liability Insurance: Liability insurance on an occurrence
          basis against claims filed anywhere in the world and occurring
          anywhere in the world for the Borrower's liability arising out of
          claims for personal injury (including bodily injury and death) and
          property damage. Such insurance shall provide coverage for
          products-completed operations, contractual liability, independent
          contractors and sudden and accidental pollution liability (which may
          be written separately on a claims made basis) with a $1,000,000
          minimum limit per occurrence for combined bodily injury and property
          damage. A maximum deductible or self-insured retention of $100,000 per
          occurrence shall be allowed.

     (2)  Automobile Liability Insurance: Automobile liability insurance for the
          Borrower's liability arising out of claims for bodily injury and
          property damage covering all owned (if any), leased, non-owned and
          hired vehicles of the Borrower, including loading and unloading, with
          a $1,000,000 minimum limit per accident for combined bodily injury and
          property damage. A


                                        1



          maximum deductible or self-insured retention of $100,000 per
          occurrence shall be allowed.

     (3)  Excess Liability Insurance: Excess liability insurance on an
          occurrence basis covering claims (on at least a following form basis)
          in excess of the underlying insurance described in the foregoing
          subsections (1) and (2), with a $74,000,000 minimum limit per
          occurrence except for insurance applicable to the Sulfide Project
          where a $49,000,000 minimum limit is required.

          The amounts of insurance required in the foregoing subsections (1),
          (2) and this subsection (3) may be satisfied by Borrower purchasing
          coverage in the amounts specified or by any combination of primary and
          excess insurance, so long as the total amount of insurance meets the
          requirements specified above.

     (4)  Aircraft Liability Insurance: Aircraft liability insurance if the
          Borrower uses an aircraft (fixed wing or helicopter) that is owned,
          operated or chartered by the Borrower, for liability arising out of
          the operation of such aircraft. The insurance shall be provided for a
          combined single limit not less than $15,000,000 each occurrence and
          such limit shall apply to bodily injury (including passengers) and
          property damage liability. In the event the Borrower charters
          aircraft, the foregoing insurance and evidence of insurance may be
          furnished by the owner of the aircraft with the Borrower included as
          additional insured. In the event that a chartered aircraft hull is
          insured, such insurance shall provide for an insurer's waiver of
          subrogation in favor of Borrower.

     (5)  Construction All Risk Insurance: Property damage insurance on an "all
          risk" basis covering the Sulfide Project and insuring the Borrower and
          Senior Facility Lenders, as their interests may appear, including
          coverage against loss or damage from the perils of earth movement
          (including but not limited to earthquake, landslide, subsidence and
          volcanic eruption), flood, sabotage, windstorm, boiler and machinery
          accidents (excluding mobile equipment), strike, riot, civil commotion
          and "terrorism". For purposes of this clause "terrorism" shall be
          defined as an act, including but not limited to the use of force or
          violence and/or the threat thereof, of any person or group(s) of
          persons, whether acting alone or on behalf of or in connection with
          any organization(s) or governments(s), committed for political,
          religious, ideological or similar purposes including the intention to
          influence any government and/or to put the public, or any section of
          the public, in fear. The terrorism coverage may be insured under a
          separate policy.


                                        2



          (a)  Property Covered: The insurance policy shall provide coverage for
               (i) the permanent structures, boilers, machinery, equipment
               (excluding construction equipment), facilities, fixtures,
               supplies (excluding consumables) and other properties
               constituting a part of the Sulfide Project, (ii) free issue items
               used in connection with the Sulfide Project, (iii) the inventory
               of spare parts to be included in the Sulfide Project, (iv) all
               preliminary works, temporary works and interconnection works and
               (v) foundations and other property below the surface of the
               ground (excluding piles).

          (b)  Additional Coverages: The insurance policy shall insure (i)
               operational and performance testing for a period not less than 90
               days, (ii) expediting expenses in an amount not less than 20% of
               the loss subject to a maximum of $10,000,000, (iii) off-site
               storage with a sub-limit of $10,000,000 and (iv) the removal of
               debris with a sub-limit not less than 10 percent of the loss
               amount, subject to a maximum of $10,000,000.

          (c)  Special Clauses: The insurance policy shall include (i) a 72 hour
               flood/storm/earthquake clause, (ii) a 50/50 clause, (iii) an
               other insurance clause making this insurance primary over any
               other insurance, (iv) a currency clause requiring that loss
               payments be paid in U.S. Dollars, (v) a clause stating that the
               policy shall not be subject to cancellation by the insurer except
               for non-payment of premium and (vi) an extension clause allowing
               the policy period to be extended up to 3 months without
               modification to the terms and conditions of the policy, excluding
               premium costs.

          (d)  Prohibited Exclusions: The insurance policy shall not contain any
               (i) coinsurance provisions, (ii) exclusion for loss or damage
               resulting from freezing, mechanical breakdown, (iii) exclusion
               for property covered under any guarantee or warranty arising out
               of an insured peril, or (iv) exclusion for resultant damage
               caused by wear and tear, deterioration, normal subsidence,
               settling, cracking, expansion or contraction, faulty workmanship,
               design or materials.

          (e)  Sum Insured: The insurance policy shall (i) be on a completed
               value form, with no periodic reporting of values, (ii) insure the
               Sulfide Project for an amount not less than $600,000,000, (iii)
               value losses at replacement cost (excluding mobile equipment
               which may be insured on an ACV basis), without deduction for
               physical depreciation or obsolescence including custom duties,
               taxes and fees, (iv) insure loss or damage from earth movement
               and flood with a


                                       3



               sub-limit not less than $250,000,000 including Delayed Startup
               Coverage, (v) insure terrorism in an amount not less than
               $100,000,000 which may be insured under a separate policy and
               (vi) insure SRCC perils in an amount not less than $25,000,000.

          (f)  Deductible: The insurance policy shall have no deductible greater
               than 5% of the value at risk at the time of loss for earthquake
               (subject to a maximum of $7,500,000) and $500,000 per occurrence
               for all other coverage.

          (g)  Policy Expiration: The insurance policy shall remain in effect
               until replaced by operational property damage insurance as
               specified in Section (A)(9) below.

     (6)  Delayed Startup Insurance: Until the date of Start-up of Commercial
          Production, delayed startup coverage covering the Sulfide Project and
          insuring the Borrower and Senior Facility Lenders, as their interests
          may appear, covering loss of income as a result of any loss or damage
          insured by Section (5) above resulting in a delay in completion of the
          Sulfide Project beyond its anticipated date of completion in an amount
          not less than $315,000,000.

          Such insurance shall (a) have a deductible of not greater than 60 days
          aggregate for all occurrences during the construction period, (b)
          include an interim payments clause allowing for the periodic payment
          of a claim pending final determination of the full claim amount, (c)
          cover loss sustained due to the loss of electrical or water supply in
          an amount not less than $5,000,000, and (d) not contain any form of a
          coinsurance provision or include a waiver of such provision, however,
          this coinsurance provision shall not apply to the "average" clause.

          Coverage shall remain in effect until replaced by business
          interruption insurance as specified in Section (A)(10) below.

     (7)  Marine Cargo Insurance: Until the date of Start-up of Commercial
          Production, cargo insurance insuring the Borrower and Senior Facility
          Lenders, as their interests may appear, on a "warehouse to warehouse"
          basis including land, air and marine transit insuring "all risks" of
          loss or damage on a replacement cost basis plus freight and insurance
          from the time the goods are in the process of being loaded for transit
          until they are finally delivered to the Sulfide Project site including
          shipment deviation, delay, forced discharge, re-shipment and
          transshipment. Such insurance shall (a) include coverage for war,
          strikes, theft, pilferage, non-delivery, charges of


                                       4



          general average sacrifice or contribution, salvage expenses, temporary
          storage in route, consolidation, repackaging, refused and returned
          shipments, jettison, washing and loss overboard of containers and
          debris removal (b) contain a replacement by air extension clause, a
          50/50 clause, a difference in conditions for C.I.F. shipments, an
          errors and omissions clause, an import duty clause, a non-vitiation
          clause (which shall be satisfied if Section (D)(4) "Separation of
          Interests" is satisfied), (c) contain no exclusion for inadequate
          packing, and (d) insure for the replacement value of the largest
          single shipment plus freight and insurance, subject to a minimum limit
          of $30,000,000 per conveyance. Such insurance shall have a maximum
          deductible of $25,000 per conveyance.

     (8)  Marine Cargo Delayed Startup Insurance: Until the Completion Release
          Date, delayed startup insurance insuring the Borrower and Senior
          Facility Lenders, as their interest may appear, covering loss of
          income due to a delay in the completion of the Project arising out of
          an event insured by the marine cargo insurance. Such insurance shall
          (a) include an interim payments clause allowing for the periodic
          payment of a claim pending final determination of the full claim
          amount and (b) loss, breakdown or damage to the hull, machinery or
          equipment of the vessel or aircraft on which the insured property is
          being transported, resulting in a delay in completion of the Sulfide
          Project beyond their anticipated date of completion in an amount not
          less than $315,000,000. Such insurance shall have a deductible of not
          greater than 30 days per occurrence.

     (9)  Operational Property Damage Insurance: Property damage insurance on an
          "all risk" basis, covering the Sulfide Operations (commencing at the
          expiration of the construction all risk coverage) and the Current
          Operations (commencing as of the Closing Date) (and collectively with
          the Sulfide Operations, the "Facility"), insuring the Borrower and
          Senior Facility Lenders, as their interests may appear, including
          coverage against damage or loss caused by earth movement (including
          but not limited to earthquake, sabotage, landslide, subsidence and
          volcanic eruption), flood, windstorm, boiler and machinery accidents,
          strike, riot, civil commotion and "terrorism". For purposes of this
          clause "terrorism" shall be defined as an act, including but not
          limited to the use of force or violence and/or the threat thereof, of
          any person or group(s) of persons, whether acting alone or on behalf
          of or in connection with any organization(s) or governments(s),
          committed for political, religious, ideological or similar purposes
          including the intention to influence any government and/or to put the
          public, or any section of the public, in fear. Terrorism may be
          insured under a separate policy.


                                       5



          (a)  Property Insured: The property damage insurance shall provide
               coverage for (i) all real and personal property constituting a
               part of the Facility, (ii) the cost of recreating plans, drawings
               or any other documents or computer system records, (iii)
               electronic equipment and (iv) foundations and other property
               below the surface of the ground.

          (b)  Additional Coverages: The property damage policy shall insure (i)
               when needed, insured property prior to its being moved to or from
               the Project site and while located away from the Project site,
               including ocean marine and air transit coverage (if applicable)
               with limits sufficient to insure the full replacement value of
               the property or equipment (other than mobile equipment), (ii)
               reasonable attorney's fees, engineering and other consulting
               costs, and permit fees directly incurred in order to repair or
               replace damaged insured property, (iii) increased cost of
               construction and loss to undamaged property as the result of
               enforcement of building laws or ordinances, (iv) debris removal
               and (v) expediting expenses (defined as extraordinary expenses
               incurred after an insured loss to make temporary repairs and
               expedite the permanent repair of the damaged property in excess
               of the business interruption even if such expense does not reduce
               the business interruption loss).

          (c)  Special Clauses: The property damage policy shall include (i) a
               72 hour clause for flood, windstorm and earthquakes, (ii) an
               unintentional errors and omissions clause, (iii) a requirement
               that the insurer pay losses within 60 days after receipt of an
               acceptable proof of loss or partial proof of loss, (iv) an other
               insurance clause making this insurance primary over any other
               insurance (excluding the extended maintenance coverage provided
               by the construction all risk policy) and (v)a clause requiring
               payment in U.S. dollars.

          (d)  Sum Insured: The property damage policy shall (i) value property
               damage losses at their repair or replacement cost (excluding
               mobile equipment which may be insured at ACV), without deduction
               for physical depreciation or obsolescence, including custom
               duties, taxes and fees and (ii) insure the Facility in an amount
               not less than $500,000,000 including the business interruption
               coverage, including any improvements, equipment, spare parts and
               supplies, without deduction for physical depreciation and/or
               obsolescence. For those perils and coverages required to be
               insured by this Section (9), sub-limits are allowed only for the
               following coverages and subject to the following minimum limits.


                                       6


               -    Professional fees - $1,000,000

               -    Undamaged property & building laws - $10,000,000

               -    Debris removal - lesser of 10% of the loss or $10,000,000

               -    Expediting expenses - $10,000,000

               -    Flood - $100,000,000

               -    Earthquake - $250,000,000

               -    Terrorism - $100,000,000

               -    Extra expenses - $100,000,000

               -    Property in transit - $10,000,000

               -    Pit walls and haul roads - $25,000,000

               -    Tailings dam - $25,000,000

          (e)  Deductibles: As respects this Appendix II the property damage
               policy may have deductibles of not greater than $25,000,000 per
               occurrence for property damage and business interruption
               combined.

          (f)  Prohibited Exclusions: The property damage policy shall not
               contain any (i) coinsurance provision, (ii) exclusion for loss or
               damage resulting from freezing, mechanical breakdown, (iii)
               exclusion for property covered under any guarantee or warranty
               arising out of an insured peril or (iv) exclusion for resultant
               damage caused by ordinary wear and tear, gradual deterioration,
               normal subsidence, settling cracking, expansion or contraction,
               faulty workmanship, design or materials.

     (10) Business Interruption Insurance: Business interruption insurance,
          covering the Sulfide Project (on or prior to the expiration of the
          delayed startup coverage) and the Current Operations (collectively
          with the Sulfide Operation the "Facility") insuring the Borrower and
          Senior Facility Lenders, as their interests may appear, covering loss
          of income sufficient to insure the Borrower's continuing normal
          operating expenses including payroll and debt service for a period not
          less than 15 months, arising from any loss required to be insured by
          the operational property damage insurance section above in an amount
          not less than $500,000,000, including the operational property damage
          coverage.

          Such insurance shall (a) include coverage for electrical or water
          service interruption in an amount not less than $10,000,000 and (b)
          include a clause allowing interim payments on account pending
          finalization of the claim payment. Such insurance shall not contain
          any coinsurance clause or include a waiver of such clause.


                                       7



          Such insurance shall be subject to a maximum deductible of $25,000,000
          per occurrence.

(B)  Amendment of Requirements:

     (1)  Amendment by the Administrative Agent: The Administrative Agent
          (acting upon instructions from the Supermajority Facility Lenders) may
          at any time recommend amending the minimum insurance requirements and
          approved insurance companies of this Appendix II due to (i) new
          information not known by the Senior Facility Lenders on the Closing
          Date which poses a material risk to the Project or (ii) changed
          circumstances after the Closing Date which in the reasonable judgment
          of the Administrative Agent renders such coverage materially
          inadequate.

          The Administrative Agent shall provide notice to the Borrower along
          with a report setting forth the reasoning for the proposed amendment.
          The Administrative Agent and the Borrower shall negotiate the
          recommendation promptly and in good faith. The resultant agreed
          amended requirement(s) shall become effective on the next policy
          anniversary or renewal date unless otherwise agreed.

     (2)  Amendment Due To Commercial Unfeasibility: In the event any insurance
          or insurance related provisions (including the limits or deductibles
          thereof) hereby required to be maintained shall not be reasonably
          available and commercially feasible in the commercial insurance
          market:

          (i)  the Borrower shall have the right to request in writing a waiver
               from the requirement to maintain such insurance or to comply with
               such insurance related provision, which request shall be
               accompanied by a written report prepared by the Insurance
               Advisor, certifying that such insurance is "not reasonably
               available and commercially feasible" (and, in any case where the
               required amount is not so available, certifying as to the maximum
               amount which is so available) and explaining in detail the basis
               for such conclusions;

          (ii) the waiver shall be deemed to be granted if the Administrative
               Agent acting upon instructions from the Majority Facility Lenders
               does not object in writing to such request within 30 Business
               Days of receipt of the notice requesting such waiver;

          (iii) at any time after the effectiveness of any such waiver, but not
               more often than once a year, the Administrative Agent (acting
               upon


                                       8



               instructions from the Majority Facility Lenders) may request, and
               the Borrower shall furnish to the Administrative Agent within
               sixty (60) days after such request, supplemental reports
               reasonably acceptable to the Administrative Agent from the
               Insurance Advisor updating their prior report and reaffirming
               such conclusion; and

          (iv) any such waiver shall be effective only so long as such insurance
               shall not be reasonably available and commercially feasible in
               the commercial insurance market.

          For purposes of this sub-section, insurance will be considered "not
          reasonably available and commercially feasible" if it is obtainable
          only at excessive costs which are not justified in terms of the risk
          to be insured and is generally not being carried by or applicable to
          projects or operations similar to the Sulfide Project or the Current
          Operations because of such excessive costs.

(C)  Borrower Conditions and Requirements:

     (1)  Loss Notification: The Borrower shall promptly notify the
          Administrative Agent of any single loss or event reasonably likely to
          give rise to a claim against an insurer for an amount in excess of
          $10,000,000 covered by any insurance policy after application of the
          deductible in the policy.

     (2)  Loss Adjustment and Settlement: A loss under the insurance policies
          providing construction all risk, operational property damage, delayed
          startup, marine cargo, marine cargo delayed startup or business
          interruption, shall be adjusted with the insurance companies,
          including the filing in a timely manner of appropriate proceedings, by
          the Borrower, who shall consult in good faith with the Administrative
          Agent if such loss is in excess of $10,000,000 after application of
          the deductible in the policy. In addition the Borrower may in its
          reasonable judgment consent to the settlement of any loss, provided
          that in the event that the amount of the loss exceeds $35,000,000 the
          terms of such settlement is concurred with by the Administrative
          Agent.

     (3)  Compliance With Policy Requirements: The Borrower shall not
          intentionally violate or permit to be violated any of the material
          conditions, provisions or requirements of any insurance policy
          required by this Appendix II, and without prejudice to Section B(2)
          above, the Borrower shall use commercially reasonable efforts to
          perform, satisfy and comply with, or cause to be performed, satisfied
          and complied with, all conditions, provisions and requirements of all
          insurance policies.


                                       9



     (4)  Waiver of Subrogation: The Borrower hereby waives any and every claim
          for recovery from the Senior Facility Lenders for any and all loss or
          damage covered by any of the insurance policies to be maintained under
          this Agreement to the extent that such loss or damage is recovered
          under any such policy. If the foregoing waiver will preclude the
          assignment of any such claim to the extent of such recovery, by
          subrogation (or otherwise), to an insurance company (or other person),
          the Borrower shall give written notice of the terms of such waiver to
          each insurance company which has issued, or which may issue in the
          future, any such policy of insurance (if such notice is required by
          the insurance policy) and shall endeavor to cause each such insurance
          policy to be properly endorsed by the issuer thereof to, or to
          otherwise contain one or more provisions that, prevent the
          invalidation of the insurance coverage provided thereby by reason of
          such waiver. Multiple Insured Clause (Paragraph 7 deleted) shall apply
          under CAR/DSU policy. Waiver of subrogation requirements shall not
          apply to the construction liability policy.

     (5)  Evidence of Insurance: On the Closing Date and on an annual basis
          prior to each policy anniversary, the Borrower shall furnish the
          Administrative Agent with (1) evidence of insurance evidencing all of
          the insurance required by the provisions of this Appendix II. Such
          evidence of insurance shall be executed by each insurer or by an
          authorized representative of each insurer where it is not practical
          for such insurer to execute the evidence of insurance itself. Such
          evidence of insurance shall identify the insurer, the type of
          insurance, the insurance limits and the policy term and shall
          specifically contain the special provisions enumerated for such
          insurance required by this Appendix II. Upon request, the Borrower
          will promptly furnish the Administrative Agent with copies of all
          insurance policies, reinsurance policies, binders and cover notes or
          other evidence of such insurance relating to the insurance required to
          be maintained by the Borrower.

     (6)  Reports: On the Closing Date and annually thereafter within 10
          business days of the property insurance renewal or anniversary, the
          Borrower shall furnish the Administrative Agent with a report of a
          broker not directly employed with the Borrower, signed by an officer
          of the broker, stating that in the opinion of such broker, the
          insurance then carried or to be renewed is in full force and effect
          and is in accordance with the terms of this Appendix II and attaching
          a schedule of insurance policies required by the provisions of this
          Appendix II. The schedule of insurance shall include the name of the
          insurance company, policy number, type of insurance, major limits of
          liability and expiration date of the insurance policies.


                                       10



          In addition the Borrower will advise the Administrative Agent in
          writing promptly of (1) failure to maintain insurance in compliance
          with the minimum insurance required by this Appendix II and (2) any
          default in the payment of any premium and of any other act or omission
          on the part of the Borrower which may invalidate or render
          unenforceable, in whole or in part, any insurance being maintained by
          the Borrower pursuant to this Appendix II.

(D)  Insurance Policy Conditions and Requirements

     (1)  Loss Survey: All policies of insurance required to be maintained
          pursuant to this Appendix II, wherein more than one insurer provides
          the coverage on any single policy, shall have clause (or a separate
          agreement among the insurers) wherein all insurers have agreed upon
          the employment of a single firm to survey and investigate all losses
          on behalf of the insurers. Where the insurer(s) on any single policy
          do not meet the financial rating requirements specified in this
          Appendix II, the provisions of this clause shall also apply to all
          reinsurers where the reinsurers and insurers will have agreed upon a
          firm with authority to survey and investigate losses on behalf of all
          insurers and reinsurers.

     (2)  Policy Cancellation and Change: All policies of insurance or
          reinsurance required to be maintained pursuant to this Appendix II
          shall be endorsed so that if at any time they are canceled (by any
          party including the insured) so as to affect the interests of the
          Senior Facility Lenders, such cancellation shall not be effective as
          to the Senior Facility Lenders for 60 days (30 days for marine
          cargo/DSU), except for non-payment of premium which shall be for 10
          days, after notification to the Administrative Agent of written notice
          from such insurer of such cancellation or reduction. Where it is
          impossible for the Borrower to obtain agreement from insurers for such
          notice, an agreement with its insurance broker to provide the notice
          will be acceptable.

     (3)  Miscellaneous Policy Provisions: The portions of the insurance
          policies providing the required construction all risk, operational
          property damage, delayed startup, marine cargo, marine cargo delayed
          startup or business interruption insurance shall (i) not include any
          annual or term aggregate limits of liability except for the delayed
          startup limit and the perils of flood, earth movement and terrorism,
          (ii) have any aggregate limits of liability apply separately with
          respect to the Facility excluding flood, (iii) not include a clause
          requiring the payment of additional premium to reinstate the limits
          after loss (excluding the construction all risk, delayed startup
          insurance and the perils of flood, earth movement and terrorism
          provided under the operational property and business interruption
          insurance), (iv) include the


                                       11



          Senior Facility Lenders as additional insureds as their interest may
          appear, (v) with the exception of the marine cargo/DSU, CAR and
          delayed startup policy, include a clause requiring the insurer to make
          final payment on any claim within 60 days after the submission of
          proof of loss and its acceptance by the insurer and (vi) shall be
          denominated and losses payable in Dollars.

     (4)  Separation of Interests: All policies shall insure the interests of
          the Senior Facility Lenders regardless of any breach or violation by
          the Borrower or any other party of warranties, declarations or
          conditions contained in such policies, any action or inaction of the
          Borrower or others, or any foreclosure relating to the Project or any
          change in ownership of all or any portion of the Project. This section
          does not apply to the marine cargo survey warranty. This requirement
          can be met by the use of a mortgagee clause substantially similar to
          form 438BFU or the multi-insured clause. The construction all risk
          policy is subject to the multiple insured clause with paragraph 7
          deleted.

     (5)  Liability Insurance Endorsements: All policies of liability insurance
          required to be maintained by the Borrower shall be endorsed as
          follows:

          (a)  To name the Senior Facility Lenders as additional insureds;

          (b)  To provide a severability of interests and/or cross liability
               clause or a separation of insureds clause;

          (c)  Other than the automobile liability insurance, that the insurance
               shall be primary and not excess to or contributing with any
               insurance or self-insurance maintained by the Senior Facility
               Lenders, and

          (d)  Maintain policies denominated and losses payable in Dollars (to
               the extent permitted by Peruvian laws and regulations from time
               to time).

     (6)  Payment of Loss Proceeds: The insurance policies providing
          construction all risk, operational property damage, delayed startup,
          marine cargo, marine cargo delayed startup or business interruption,
          if issued outside of Peru or reinsurance policies if the primary
          policies are issued within Peru, shall specify that the proceeds of
          such policies shall be payable solely to the Trustee for deposit in
          the Proceeds Account. All proceeds paid within Peru from such policies
          shall be paid to the Onshore Collateral Agent for deposit into the
          Onshore Dollars Account or the Onshore Nuevo Soles Account as
          applicable.


                                       12



(E)  Failure to Maintain Insurance: In the event the Borrower fails, or fails to
     cause the Contractor or the Operator, to take out or maintain the full
     insurance coverage required by this Appendix II, the Administrative Agent,
     upon 30 days' prior notice (unless the aforementioned insurance would lapse
     within such period, in which event notice should be given as soon as
     reasonably possible) to the Borrower of any such failure, may (but shall
     not be obligated to) take out the required policies of insurance and pay
     the premiums on the same. All amounts so advanced thereof by the
     Administrative Agent shall become an additional obligation of the Borrower
     to the Administrative Agent, and the Borrower shall forthwith pay such
     amounts to the Administrative Agent, together with interest thereon at the
     Past-Due Rate from the date so advanced.

(F)  No Duty of Senior Facility Lenders to Verify or Review: No provision of
     this Appendix II or any provision of the Credit Agreement or any Project
     Document shall impose on the Senior Facility Lenders any duty or obligation
     to verify the existence or adequacy of the insurance coverage maintained by
     the Borrower, nor shall the Senior Facility Lenders be responsible for any
     representations or warranties made by or on behalf of the Borrower to any
     insurance company or underwriter. Any failure on the part of the Senior
     Facility Lenders to pursue or obtain the evidence of insurance required by
     this Agreement from the Borrower and/or failure of the Senior Facility
     Lenders to point out any non-compliance of such evidence of insurance shall
     not constitute a waiver of any of the insurance requirements in this
     Agreement.

(G)  Acceptable Policy Terms and Conditions: The portions of all policies of
     insurance required to be maintained pursuant to this Appendix II shall
     contain terms and conditions reasonably acceptable to the Administrative
     Agent. If the requirements of this Appendix II are satisfied through a
     global insurance policy maintained by PDC or any of its Affiliates, the
     requirements of this Appendix II shall be required to be satisfied by such
     policy only in so far as it relates to the Borrower.

(H)  Delayed Effective Date: Notwithstanding the foregoing, until December 1,
     2005, the Borrower will not be required to comply with the requirements to
     (1) maintain terrorism insurance, (2) have a business interruption
     indemnity period of 15 months but instead have an indemnity period of 12
     months and (3) have the earthquake aggregate limit apply separately to the
     Sulphide Facility.

(I)  Delayed Implementation Date: Notwithstanding the foregoing, until the
     suspension or termination of the Completion Guarantee for an Event of
     Political Force Majeure pursuant to Section 5.01 of the Completion
     Guarantee or Section 11.01 of the Master Participation Agreement, the
     Borrower will not be required to comply with the payment of loss proceeds
     requirement in Section (D)(6) of this


                                       13



     Appendix II as it applies to the construction all risk, delayed startup,
     marine cargo and marine cargo delayed startup insurance.


                                       14



                                  Appendix III

                              Form of Annual Budget



                       SOCIEDAD MINERA CERRO VERDE S.A.A.
                                 BALANCE SHEET
                                   YEAR 2005
                           (IN THOUSAND U.S. DOLLARS)



                                           PRELIM
                                            2005   JAN-06  FEB-06  MAR-06  APR-06  MAY-06  JUN-06  JUL-06
                                           ------  ------  ------  ------  ------  ------  ------  ------
                                                                           
ASSETS
   Cash and short-term investments, at
      cost
   Receivables, net
   Inventories
   Supplies
   Prepaid Expenses

      Current Assets

   Property, plant and equipment, net
   Other Assets
Total Assets

LIABILITIES
   Accounts Payable and accrued expenses
   Accrued Taxes
   Short term-debt
   Accrued Interest
      Current Liabilities

   Dividends payable
   Long term-debt
      Long term bank debt
      Long term bond debt
   Deferred Income Taxes
   Other liabilities & deferred credits

SHAREHOLDER'S EQUITY
   Common and pref. Shares,
   Capital in Excess of Par
   Reserves
   Dividends
   Retained earnings, Beginning of period
   Transfer to Reserves
   Net Income
   Total shareholder's equity
Total liabilities and shareholder's
   equity



                                           AUG-06  SEP-06  OCT-06  NOV-06  DEC-06  2006  2007  2008
                                           ------  ------  ------  ------  ------  ----  ----  ----
                                                                       
ASSETS
   Cash and short-term investments, at
      cost
   Receivables, net
   Inventories
   Supplies
   Prepaid Expenses

      Current Assets

   Property, plant and equipment, net
   Other Assets
Total Assets

LIABILITIES
   Accounts Payable and accrued expenses
   Accrued Taxes
   Short term-debt
   Accrued Interest
      Current Liabilities

   Dividends payable
   Long term-debt
      Long term bank debt
      Long term bond debt
   Deferred Income Taxes
   Other liabilities & deferred credits

SHAREHOLDER'S EQUITY
   Common and pref. Shares,
   Capital in Excess of Par
   Reserves
   Dividends
   Retained earnings, Beginning of period
   Transfer to Reserves
   Net Income
   Total shareholder's equity
Total liabilities and shareholder's
   equity



                                        1



                       SOCIEDAD MINERA CERRO VERDE S.A.A.
                        STATEMENT OF INCOME AND EXPENSES
                                    YEAR 2005
                           (IN THOUSAND U.S. DOLLARS)



                                          PRELIM
                                           2005   JAN-06  FEB-06  MAR-06  APR-06  MAY-06  JUN-06  JUL-06
                                          ------  ------  ------  ------  ------  ------  ------  ------
                                                                          
SALES AND OTHER OPERATING REVENUES
   Copper Revenues, cathode
   Copper Revenues, concentrate
   Silver Revenues
   Gold Revenues
   Swaps
   Eliminations
   Swaps Eliminations

OPERATING COST AND EXPENSES
   Cost of products sold
   Treatment & Refining
   Concentrate Shipping & Handling
   Swaps Cost of Sales
   Depreciation, depletion and
      amortization
   Selling and general adm.
      expenses

OPERATING INCOME

Equity earning (losses)

EARNING FROM OPERATIONS
   Interest expense
   Capitalized Interest
   Miscellaneous income and expense, net

INCOME BEFORE TAXES AND CUMULATIVE
   EFFECT OF ACCOUNTING CHANGES

   Provision for taxes
   Employees participation
   Income tax benefit

INCOME BEFORE CUMULATIVE EFFECT OF
   ACCOUNTING CHANGES

Minority Interest
   Cumulative effect of accounting
      changes

NET INCOME



                                          AUG-06  SEP-06  OCT-06  NOV-06  DEC-06  2006  2007  2008
                                          ------  ------  ------  ------  ------  ----  ----  ----
                                                                      
SALES AND OTHER OPERATING REVENUES
   Copper Revenues, cathode
   Copper Revenues, concentrate
   Silver Revenues
   Gold Revenues
   Swaps
   Eliminations
   Swaps Eliminations

OPERATING COST AND EXPENSES
   Cost of products sold
   Treatment & Refining
   Concentrate Shipping & Handling
   Swaps Cost of Sales
   Depreciation, depletion and
      amortization
   Selling and general adm.
      expenses

OPERATING INCOME

Equity earning (losses)

EARNING FROM OPERATIONS
   Interest expense
   Capitalized Interest
   Miscellaneous income and expense, net

INCOME BEFORE TAXES AND CUMULATIVE
   EFFECT OF ACCOUNTING CHANGES

   Provision for taxes
   Employees participation
   Income tax benefit

INCOME BEFORE CUMULATIVE EFFECT OF
   ACCOUNTING CHANGES

Minority Interest
   Cumulative effect of accounting
      changes

NET INCOME



                                        2



                       SOCIEDAD MIHERA CERRO VERDE S.A.A.
                             STATEMENT OF CASH FLOW
                                    YEAR 2005
                           (IN THOUSAND U.S. DOLLARS)



                                                  PRELIM
                                                   2005   JAN-06  FEB-06  MAR-06  APR-06  MAY-06  JUN-06  JUL-06
                                                  ------  ------  ------  ------  ------  ------  ------  ------
                                                                                  
OPERATING ACTIVITIES
Net Income
   Adjustments to reconcile net income cash flow
      from operations:
   Depreciation, depletion and amortization
   Deferred income taxes
   Changes in current assets and liabilities
   Other

   NET CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES
   Capital Outlays
   Other

   NET CASH USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES
   Bank debt (Increase)
   Bond debt (Increase)
   Bank debt (Repayments)
   Bond debt (Repayments)
   Subordinated debt (Payment)
Issuance of Capital Stock
Ordinary Dividends
Debt issue costs
Other

   NET CASH PROVIDED BY (USED IN)
      FINANCING ACTIVITIES

INCREASE (OR DECREASE) IN CASH AND SHORT-TERM
      INVESTMENTS...............................
CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
   OF PERIOD....................................

CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
   OF PERIOD....................................


                                                  AUG-06  SEP-06  OCT-06  NOV-06  DEC-06  2006  2007  2008
                                                  ------  ------  ------  ------  ------  ----  ----  ----
                                                                              
OPERATING ACTIVITIES
Net Income
   Adjustments to reconcile net income cash flow
      from operations:
   Depreciation, depletion and amortization
   Deferred income taxes
   Changes in current assets and liabilities
   Other

   NET CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES
   Capital Outlays
   Other

NET CASH USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES
   Bank debt (Increase)
   Bond debt (Increase)
   Bank debt (Repayments)
   Bond debt (Repayments)
   Subordinated debt (Payment)
Issuance of Capital Stock
Ordinary Dividends
Debt issue costs
Other

   NET CASH PROVIDED BY (USED IN)
      FINANCING ACTIVITIES

INCREASE (OR DECREASE) IN CASH AND SHORT-TERM
   INVESTMENTS..................................

CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
   OF PERIOD....................................

CASH AND SHORT-TERM INVESTMENTS AT BEGINNING
   OF PERIOD....................................



                                        3



                       SOCIEDAD MINERA CERRO VERDE S.A.A.
                              CAPITAL EXPENDITURES
                                    YEAR 2005
                           (IN THOUSAND U.S. DOLLARS)



                            PRELIM
                             2005   JAN-06  FEB-06  MAR-06  APR-06  MAY-06  JUN-06  JUL-06
                            ------  ------  ------  ------  ------  ------  ------  ------
                                                            
AREAS

   Mine

   Crushing & Conveying

   Leach

   SX-EW

   Concentrator

   General Administration

Total Capital Expenditures


                            AUG-06  SEP-06  OCT-06  NOV-06  DEC-06  2006  2007  2008
                            ------  ------  ------  ------  ------  ----  ----  ----
                                                        
AREAS

   Mine

   Crushing & Conveying

   Leach

   SX-EW

   Concentrator

   General Administration

Total Capital Expenditures



                                        4



                       SOCIEDAD MINERA CERRO VERDE S.A.A.
                            KEY OPERATING STATISTICS



                                                   PRELIM
                                                    2005    JAN-06   FEB-06   MAR-06   APR-06   MAY-06   JUN-06   JUL-06
                                                   ------   ------   ------   ------   ------   ------   ------   ------
                                                                                       
PRODUCTION

MATERIAL MINED EX-PIT                      K dmt

MILL
   ORE MILLED                              K dmt

   CONCENTRATE PRODUCTION, PAYABLE METAL
      Copper concentrate                   K dmt
         Copper                            M lbs
         Silver, contained in cu conc
            (payable)                      M ozs
      Molybdenum concentrate               K dmt
         Molybdenum (payable)              M lbs
LEACH
   TOTAL MATERIAL LEACHED
      Total Leached material Placed        K dmt
      Grade                                %

   SX-EW
      Flow rate                            gpm
      PLS grade                            gpl
      Cu harvested                         Klbs
      Cu harvested, tonnes                 Kdmt

PRODUCTION SUMMARY
   COPPER, PAYABLE METAL
      Cathode                              M lbs
      Concentrate                          M lbs
         Total                             M lbs
      Molybdenum                           M lbs
      Silver, contained in cu conc (Mozs)  M ozs

CASH OPERATING COSTS
   Mine                                    $000
   Concentrator                            $000
   Crushing & Leach                        $000
   SX-EW                                   $000
   General Administration                  $000
      Total Direct Operating Costs         $000



                                           AUG-06   SEP-06   OCT-06   NOV-06   DEC-06   2006   2007   2008
                                           ------   ------   ------   ------   ------   ----   ----   ----
                                                                              
PRODUCTION

MATERIAL MINED EX-PIT

MILL
   ORE MILLED

   CONCENTRATE PRODUCTION, PAYABLE METAL
      Copper concentrate
         Copper
         Silver, contained in cu conc
            (payable)
      Molybdenum concentrate
         Molybdenum (payable)
LEACH
   TOTAL MATERIAL LEACHED
      Total Leached material Placed
      Grade

   SX-EW
      Flow rate
      PLS grade
      Cu harvested
      Cu harvested, tonnes

PRODUCTION SUMMARY
   COPPER, PAYABLE METAL
      Cathode
      Concentrate
         Total
      Molybdenum
      Silver, contained in cu conc (Mozs)

CASH OPERATING COSTS
   Mine
   Concentrator
   Crushing & Leach
   SX-EW
   General Administration
      Total Direct Operating Costs



                                        5



                       SOCIEDAD MINERA CERRO VERDE S.A.A.
                                   ASSUMPTIONS



                                           PRELIM
                                            2005    JAN-06   FEB-06   MAR-06   APR-O6   MAY-06   JUN-06   JUL-O6   AUG-06
                                           ------   ------   ------   ------   ------   ------   ------   ------   ------
                                                                                        
PRICES
   Copper
   Silver
   Molybdenum

LEACH STATISTICS
   ORE GRADE
      Copper

CONCENTRATOR STATISTICS
   ORE GRADE
      Copper
      Molybdenum
      Silver

   METAL RECOVERIES
      Copper
      Molybdenum
      Silver

   CONCENTRATE GRADE
      Copper
      Silver contained in copper conc
      Molybdenum

   SALES VOLUME, PAYABLE LBS
      Copper concentrate
      Copper cathode
      Molybdenum
      Silver, contained in cu conc (ozs)

PERSONNEL PLAN
   Mine
   Crushing & Conveying
   Leach
   SX-EW
   Concentrator
   G&A
      Total



                                           SEP-06   OCT-06   NOV-06   DEC-06   2006   2007   2008
                                           ------   ------   ------   ------   ----   ----   ----
                                                                        
PRICES
   Copper
   Silver
   Molybdenum

LEACH STATISTICS
   ORE GRADE
      Copper

CONCENTRATOR STATISTICS
   ORE GRADE
      Copper
      Molybdenum
      Silver

   METAL RECOVERIES
      Copper
      Molybdenum
      Silver

   CONCENTRATE GRADE
      Copper
      Silver contained in copper conc
      Molybdenum

   SALES VOLUME, PAYABLE LBS
      Copper concentrate
      Copper cathode
      Molybdenum
      Silver, contained in cu conc (ozs)

PERSONNEL PLAN
   Mine
   Crushing & Conveying
   Leach
   SX-EW
   Concentrator
   G&A
      Total




                                        6

EX-10.2

                                                                    Exhibit 10.7

                                                                  EXECUTION COPY

================================================================================

                              COMPLETION GUARANTEE

                                      among

                        SUMITOMO METAL MINING CO., LTD.,
                              as a Parent Company,

                              SUMITOMO CORPORATION,
                              as a Parent Company,

                     COMPANIA DE MINAS BUENAVENTURA S.A.A.,
                              as a Parent Company,

                            PHELPS DODGE CORPORATION,
                              as a Parent Company,

                    JAPAN BANK FOR INTERNATIONAL COOPERATION,
                          as a Senior Facility Lender,

                      SUMITOMO MITSUI BANKING CORPORATION,
                 as a Lead JBIC Arranger and Global Coordinator,

                       THE BANK OF TOKYO-MITSUBISHI, LTD.,
                            as a Lead JBIC Arranger,

                                      KfW,
                          as a Senior Facility Lender,

                             CALYON NEW YORK BRANCH,
       as a Senior Facility Lender, Lead Arranger and Global Coordinator,

                         THE ROYAL BANK OF SCOTLAND PLC,
                 as a Senior Facility Lender and Lead Arranger,

                            THE BANK OF NOVA SCOTIA,
                 as a Senior Facility Lender and Lead Arranger,

                          MIZUHO CORPORATE BANK, LTD.,
                 as a Senior Facility Lender and Lead Arranger,

                                       and

                             CALYON NEW YORK BRANCH,
                             as Administrative Agent

                         Dated as of September 30, 2005

================================================================================

                                Table of Contents



                                                                            Page
                                                                            ----
                                                                      
                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

1.01   Definitions.......................................................     3
1.02   Interpretation....................................................     4

                                   ARTICLE II

                                   COMPLETION

2.01   Full Completion...................................................     5
2.02   Partial Completion................................................     6
2.03   Completion Certificates...........................................     7
2.04   Waiver of Completion Conditions...................................     8

                                   ARTICLE III

                             COMPLETION UNDERTAKING

3.01   Completion Undertaking............................................     8
3.02   Funding Obligations...............................................     9
3.03   Debt Buy-Down Option..............................................    11

                                   ARTICLE IV

                      GUARANTEE OF SENIOR LOANS OBLIGATIONS

4.01   Guarantee of Senior Loans Obligations.............................    13
4.02   Payments Free and Clear of Taxes, Etc.............................    15
4.03   Subrogation of Parent Companies to Rights of Senior Lenders
       Against Borrower..................................................    16
4.04   Several Obligations...............................................    16

                                    ARTICLE V

                  SUSPENSION AND TERMINATION OF OBLIGATIONS DUE
                       TO EVENT OF POLITICAL FORCE MAJEURE

5.01   Declaration of Event of Political Force Majeure; Suspension of
       Obligations.......................................................    16
5.02   Termination Due to Event of Political Force Majeure...............    16



                                        i

                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                      
5.03   Notice by Parent Companies of Exercise of Suspension
       or Termination Rights.............................................    17
5.04   Arbitration.......................................................    17
5.05   Reinstatement of Suspended Obligations............................    17
5.06   Limitations on Rights to Suspend or Terminate.....................    18
5.07   Effect of Arbitration on Time Periods.............................    19

                                   ARTICLE VI

             REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES

6.01   Representations and Warranties of the Parent Companies............    19

                                   ARTICLE VII

                        COVENANTS OF THE PARENT COMPANIES

7.01   Net Worth.........................................................    21
7.02   Financial Disclosure..............................................    21

                                  ARTICLE VIII

                             PARENT COMPANY DEFAULTS

8.01   Parent Company Defaults...........................................    22
8.02   Exception to Section 8.01.........................................    23
8.03   Declaration of Event of Default...................................    23
8.04   Cessation of PC Event of Default; Rescission of Acceleration......    24
8.05   Remedies..........................................................    24
8.06   Control of PC Enforcement Action by Administrative Agent..........    25
8.07   Limitation on Enforcement Action..................................    26

                                   ARTICLE IX

                                  MISCELLANEOUS

9.01   Subordination of the Parent Companies.............................    27
9.02   Accession.........................................................    28
9.03   Termination of Agreement..........................................    28
9.04   Currency Equivalents..............................................    28
9.05   GOVERNING LAW.....................................................    28
9.06   Severability......................................................    28
9.07   Entire Agreement..................................................    29



                                       ii

                                Table of Contents
                                   (continued)



                                                                            Page
                                                                            ----
                                                                      
9.08   Notices...........................................................    29
9.09   Successors and Assigns............................................    30
9.10   Benefits of Agreement.............................................    31
9.11   Remedies..........................................................    31
9.12   Execution in Counterparts.........................................    31
9.13   Consent to Jurisdiction...........................................    31
9.14   Amendments and Waivers............................................    32
9.15   Effectiveness.....................................................    32
9.16   Arbitration.......................................................    32
9.17   No Trial by Jury..................................................    34
9.18   No Partnership....................................................    34
9.19   Expenses..........................................................    34
9.20   No Immunity.......................................................    34


Schedule A      Sample Calculation of the Retired Principal Senior Loan Amount

Exhibit A       Terms of Subordination
Exhibit B       Form of Pledge Agreement

Appendix A-1    Form of Production Full Completion Certificate
Appendix A-2    Form of Efficiency Full Completion Certificate
Appendix A-3    Form of Physical Facilities Completion Certificate
Appendix A-4    Form of Insurance Completion Certificate
Appendix A-5    Form of Legal Completion Certificate
Appendix A-6    Form of I.A. Financial Completion Certificate
Appendix A-7    Form of Borrower Financial Completion Certificate
Appendix A-8    Form of Environmental Certificate
Appendix A-9    Form of Production Partial Completion Certificate
Appendix A-10   Form of Efficiency Partial Completion Certificate


                                       iii

                              COMPLETION GUARANTEE

     This COMPLETION GUARANTEE (this "Agreement"), dated as of September 30,
2005, is made among:

     SUMITOMO METAL MINING CO., LTD., a corporation organized under the laws of
Japan ("SMM");

     SUMITOMO CORPORATION, a corporation organized under the laws of Japan
("SC");

     COMPANIA DE MINAS BUENAVENTURA S.A.A., a Peruvian sociedad anonima abierta
("BVN");

     PHELPS DODGE CORPORATION, a company organized under the laws of the State
of New York ("PDC" and, together with SMM, SC and BVN, the "Parent Companies");

     JAPAN BANK FOR INTERNATIONAL COOPERATION, a Japanese government financial
institution organized under the laws of Japan ("JBIC"), in its capacity as a
Senior Facility Lender;

     SUMITOMO MITSUI BANKING CORPORATION, a stock corporation organized under
the laws of Japan, as lead JBIC arranger and Global Coordinator ("SMBC");

     THE BANK OF TOKYO-MITSUBISHI, LTD., a banking institution organized under
the laws of Japan, as lead JBIC arranger ("BOT-M" and together with SMBC, in
their capacity as lead JBIC arrangers, the "Lead JBIC Arrangers");

     KfW, a public corporation formed under the laws of the Federal Republic of
Germany ("KfW"), in its capacity as a Senior Facility Lender;

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic ("Calyon"), in its
capacity as a Senior Facility Lender, Lead Arranger and Global Coordinator;

     THE ROYAL BANK OF SCOTLAND PLC, a public limited company incorporated under
the laws of Scotland ("rbs"), in its capacity as a Senior Facility Lender and
Lead Arranger;

     THE BANK OF NOVA SCOTIA CAPITAL, a Canadian chartered bank, organized under
the laws of Canada ("Scotia Capital"), in its capacity as a Senior Facility
Lender and Lead Arranger;

     MIZUHO CORPORATE BANK, LTD., a banking institution organized under the laws
of Japan ("Mizuho", and collectively with Calyon, RBS and Scotia Capital, the
"Commercial Banks"), in its capacity as a Senior Facility Lender and Lead
Arranger; and

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic, as Administrative
Agent for the Senior Lenders (in such capacity, together with successors and
assignees, the "Administrative Agent").

                                    WHEREAS:

     A. Sociedad Minera Cerro Verde S.A.A. (the "Borrower") proposes to incur
Senior Loans Obligations in order to develop the Sulfide Project at its existing
Mines in the District of Uchumayo and Yarabamba, Province of Arequipa, Republic
of Peru;

     B. On the date hereof, JBIC has entered into the JBIC Loan Agreement with
Borrower, KfW has entered into the KfW Loan Agreement with Borrower and the
Commercial Banks have entered into the Commercial Banks Loan Agreement with
Borrower. Each such agreement reflects, among other terms, (i) the commitment of
each Senior Facility Lender that is a party thereto to make from time to time
Advances to the Borrower in an amount up to its Aggregate Committed Amount and
(ii) the Borrower's agreement to repay such Advances with interest;

     C. On the date hereof, the Borrower, JBIC, the Lead JBIC Arrangers, KfW,
the Commercial Banks, the Global Coordinators, the Lead Arrangers and the
Administrative Agent have entered into the Master Participation Agreement dated
as of the date hereof (the "Master Participation Agreement" or "MPA") which sets
forth various terms for the financing of the development of the Sulfide Project;

     D. The Master Participation Agreement contemplates that the Borrower shall
have the right to issue Peruvian Bonds under a Peruvian Bonds Program and that
the Common Representative shall become a party to this Agreement by entering
into, in its capacity as Common Representative, a New Party Accession Agreement
and thereupon the Common Representative and the Peruvian Bondholders shall have
all the rights and obligations of, respectively, the Common Representative and
the Peruvian Bondholders under this Agreement; and

     E. The Parent Companies have authorized the execution and delivery of this
Agreement to undertake specified obligations to induce the Senior Lenders to
make Senior Loans to the Borrower.

     NOW, THEREFORE, in consideration of the execution of the Master
Participation Agreement and the Senior Loan Documents by the Senior Lenders, to
induce the Senior Lenders to make Senior Loans thereunder, and for other good
and


                                        2

valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent Companies, each of the Lead JBIC Arrangers, each of the
Senior Facility Lenders and the Administrative Agent (each a "CG Party" and
collectively, the "CG Parties", which term shall include the Common
Representative after the Common Representative has become a party to this
Agreement in accordance with Section 9.02(a) and any Replacement Lender or
Bridge Loan Provider after such Replacement Lender or Bridge Loan Provider has
become a party to this Agreement in accordance with Section 9.02(b)) agree as
follows:

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to the Master Security Agreement, dated as of the
date hereof, among the Borrower, the Senior Lenders, the Lead JBIC Arrangers,
the Global Coordinators, the Lead Arrangers, the Administrative Agent, the
Trustee, the Offshore Collateral Agent and the Onshore Collateral Agent.

     "Accelerated Parent Company": a Parent Company with respect to which a
Completion Guarantee Acceleration Event has occurred.

     "Completion Certificates": collectively, the Full Completion Variable
Certificates, the Partial Completion Variable Certificates and the Non-Variable
Certificates.

     "Completion Guarantee Acceleration Event": with respect to any Parent
Company, either (i) such Parent Company commences a proceeding under any
applicable bankruptcy, reorganization, arrangement, readjustment of debt, relief
of debtors, dissolution, insolvency, liquidation or similar law (whether now or
hereafter in effect) relating to itself, or is declared bankrupt, is dissolved
by reason of insolvency or makes a general assignment for the benefit of
creditors, or any action is taken by it for the purpose of effecting any of the
foregoing or by a receiver, custodian or trustee or other officer or
representative of a court or of creditors; or there is commenced against it any
such proceeding which remains undismissed for 60 days or (ii) such Parent
Company fails to maintain a Net Worth at least equal to U.S.$1,500,000,000, in
the case of PDC, Y90,000,000,000 in the case of SMM or SC and U.S.$300,000,000
in the case of BVN.

     "Completion Guarantee Obligations": the obligations of the Parent Companies
under this Agreement.

     "Completion Release Date": the date of achievement of either (i) Full
Completion or (ii) Partial Completion.


                                        3

     "Defaulting Parent Company": a Parent Company with respect to which a PC
Event of Default has occurred.

     "Guarantee Release Date": either (i) the date of achievement of Full
Completion, with respect to all Parent Companies, or (ii) the date of occurrence
of the Debt Buy-Down Release Date as contemplated under Section 3.03(d) of the
Completion Guarantee.

     "Net Worth": with respect to any Person, its net worth calculated in
accordance with United States GAAP.

     "Non-Accelerated Parent Companies": Parent Companies that are not
Accelerated Parent Companies.

     "PC Agreements": collectively, the Completion Guarantee and the Transfer
Restrictions Agreement.

     "PC Enforcement Action": means taking any legal, equitable or other
remedial action provided under the Completion Guarantee or the Transfer
Restrictions Agreement or any other action available under applicable law
against a given Defaulting Parent Company, provided that actions taken by Senior
Lenders pursuant to Section 8.06 of this Agreement shall not constitute "PC
Enforcement Action".

     "Pro Rata Share": with respect to (i) PDC, 57.720%, (ii) SMM, 18.104%,
(iii) SC, 4.526% and (iv) BVN, 19.650%.

     "Subordinated Lender": a Person making a Subordinated Loan to the Borrower.

     "Subordinated Loans": unsecured indebtedness of the Borrower to a
Subordinated Lender, whether presently outstanding or hereafter created,
incurred or assumed, that is subordinated to the Senior Loans on the terms set
forth in Exhibit A to the Completion Guarantee.

     "Target Completion Date": the date that is 42 months after the signing date
of the MPA.

     "TRA Parties": the meaning given in preamble of the TRA.

     "Transfer Restrictions Agreement" or "TRA": the Transfer Restrictions
Agreement, dated as of the date of the MPA, among the TRA Parties.

     1.02 Interpretation. In this Agreement and in the Appendices hereto, except
to the extent that the context otherwise requires:


                                        4

          (a) the Table of Contents, Articles and Section headings are for
     convenience of reference only and shall not affect the interpretation of
     this Agreement;

          (b) unless otherwise specified, references to Articles, Sections,
     clauses, Exhibits, Schedules and Appendices are references to Articles,
     Sections, clauses Exhibits and Schedules of, and Appendices to, this
     Agreement;

          (c) references to any document or agreement, including this Agreement,
     shall be deemed to include references to such document or agreement as
     amended, supplemented or replaced and in effect from time to time in
     accordance with its terms and subject to compliance with the requirements
     set forth herein and therein;

          (d) references to any party to this Agreement or any other document or
     agreement or to any other Person shall include its successors and permitted
     assigns;

          (e) when used in this Agreement, the words "including", "includes" and
     "include" shall be deemed to be followed in each instance by the words
     "without limitation";

          (f) when used in this Agreement, the words "herein", "hereby",
     "hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and
     words of similar import, shall refer to this Agreement in its entirety and
     not to any particular section, subsection, paragraph, sub-paragraph, clause
     or other subdivision, exhibit, schedule or appendix of this Agreement; and

          (g) when used herein, the singular shall include the plural, the
     plural shall include the singular and the use of any gender shall include
     all genders, unless the context requires otherwise.

                                   ARTICLE II

                                   COMPLETION

     2.01 Full Completion. For purposes of this Agreement, "Full Completion"
shall (subject to Section 2.03(b) hereof) occur upon the delivery by the
Borrower to the Administrative Agent of the certificates and other documents,
listed in clauses (a) through (h) below (each certificate listed in clause (a)
and (b), a "Full Completion Variable Certificate", and each certificate listed
in clause (c) through (h), a "Non-Variable Certificate").


                                       5

     (a) Production Full Completion Certificate. A "Production Full Completion
Certificate" executed by an Authorized Officer of the Borrower and verified by
the Independent Engineer, substantially in the form set forth in Appendix A-1.

     (b) Efficiency Full Completion Certificate. An "Efficiency Full Completion
Certificate" executed by an Authorized Officer of the Borrower and verified by
the Independent Engineer, substantially in the form set forth in Appendix A-2.

     (c) Physical Facilities Completion Certificate. A "Physical Facilities
Completion Certificate" executed by an Authorized Officer of the Borrower and
verified by the Independent Engineer, substantially in the form set forth in
Appendix A-3.

     (d) Insurance Completion Certificate. An "Insurance Completion Certificate"
executed by an Authorized Officer of the Borrower and verified by the Insurance
Consultant, substantially in the form set forth in Appendix A-4.

     (e) Legal Completion Certificate. A "Legal Completion Certificate" executed
by an Authorized Officer of the Borrower, substantially in the form set forth in
Appendix A-5.

     (f) I.A. Financial Completion Certificate. An "I.A. Financial Completion
Certificate" executed by the Independent Accountant, substantially in the form
set forth in Appendix A-6.

     (g) Borrower Financial Completion Certificate. A "Borrower Financial
Completion Certificate" executed by an Authorized Officer of the Borrower,
substantially in the form set forth in Appendix A-7.

     (h) Environmental Certificate. An "Environmental Certificate" executed by
an Authorized Officer of the Borrower and verified by the Independent Engineer,
substantially in the form set forth in Appendix A-8.

     2.02 Partial Completion. For purposes of this Agreement, "Partial
Completion" shall (subject to Section 2.03(b) hereof) occur upon the delivery by
the Borrower to the Administrative Agent of (i) the certificates and other
documents, listed in clauses (a) and (b) below (each, a "Partial Completion
Variable Certificate") and (ii) the Non-Variable Certificates.

     (a) Production Partial Completion Certificate. A "Production Partial
Completion Certificate" executed by an Authorized Officer of the Borrower and
verified by the Independent Engineer, substantially in the form set forth in
Appendix A-9.


                                       6

     (b) Efficiency Partial Completion Certificate. An "Efficiency Partial
Completion Certificate" executed by an Authorized Officer of the Borrower and
verified by the Independent Engineer, substantially in the form set forth in
Appendix A-10.

     2.03 Completion Certificates.

     (a) The Borrower may deliver the Completion Certificates, together or
separately in any order and at any time and from time to time, provided that (i)
the Non-Variable Certificates (other than the Physical Facilities Completion
Certificate) each shall be dated as of a date not earlier than the latest of the
dates of the Variable Certificates; (ii) the Legal Completion Certificate and
the Environmental Certificate shall be dated as of the same date and (iii) the
Completion Test Period for the purpose of each Variable Certificate shall be the
same, it being understood that such period may be different from the testing
period used for the purpose of the Physical Facilities Completion Certificate.

     (b) Each Completion Certificate will be conclusive as to the matters
covered therein, unless within 30 Business Days after delivery of the latest of
the Completion Certificates the Administrative Agent (acting upon written
instructions from any three Senior Lenders) notifies the Borrower that it
intends to commence an arbitration proceeding in accordance with Section 9.16 (a
"Completion Arbitration") and within 30 Business Days of such notification the
Administrative Agent (acting upon written instructions from any three Senior
Lenders) actually commences such arbitration.

     (c) During the pendency of any Completion Arbitration:

          (i) Full Completion or Partial Completion, as the case may be, shall
     be deemed not to have occurred, unless a revised, or a revised set of,
     Completion Certificate(s) is delivered and not challenged in accordance
     with Section 2.03(b);

          (ii) the Parent Companies shall only be required to make Completion
     Loans pursuant to Section 3.02 to the extent necessary to pay for care and
     maintenance costs of the Borrower that are not otherwise funded; and

          (iii) any payment to be made by a Parent Company pursuant to Article
     IV shall be paid to the Administrative Agent and shall be held by the
     Administrative Agent in escrow pending resolution of the Completion
     Arbitration.

     (d) At the conclusion of a Completion Arbitration,

          (i) If the arbitration panel referred to in Section 9.16 determines
     that a Completion Certificate was false in any material respect as of its
     date, all payments made to the Administrative Agent in escrow pursuant to
     Section 2.03(c)(iii) shall be distributed by the Administrative Agent to
     the Senior


                                       7

     Lenders entitled to receive such payment pursuant to Article IV. In
     addition, if the challenged Completion Certificate is otherwise determined
     in such arbitration proceeding to satisfy the conditions for such
     certificate to qualify as a Partial Completion Variable Certificate,
     Borrower shall be entitled, during a period of 30 days, to deliver a
     replacement certificate with all of the information being true and correct
     in which case (x) Partial Completion will be deemed to have occurred as of
     the date of delivery of the latest of the Completion Certificates provided
     that the replacement certificate will be deemed delivered as of the date of
     delivery of the certificate so replaced and (y) the period of time allowed
     to the Parent Companies for exercise of the Debt Buy-Down Option pursuant
     to Section 3.03(a) shall be extended, as necessary, so that such period of
     time expires no earlier than the date that is 30 days after the conclusion
     of the Completion Arbitration.

          (ii) If the arbitration panel referred to in Section 9.16 determines
     that Full Completion or Partial Completion, as the case may be, had
     occurred, Full Completion or Partial Completion will be deemed to have
     occurred as of the date of delivery of the latest of the Completion
     Certificates and all payments made by any Parent Company to the
     Administrative Agent in escrow pursuant to Section 2.03(c)(iii), shall be
     returned by the Administrative Agent to such Parent Company together with
     accrued interest thereon.

     2.04 Waiver of Completion Conditions. The Administrative Agent (acting upon
instructions from each Senior Lender) may declare Full Completion or Partial
Completion to have occurred at any time prior to the satisfaction of the
conditions set forth in Section 2.01 or Section 2.02, as the case may be, by
delivering a notice to the Borrower and to each Parent Company, stating that
Full Completion or Partial Completion, as the case may be, has occurred.

                                   ARTICLE III

                             COMPLETION UNDERTAKING

     3.01 Completion Undertaking. Subject to Article V hereof, each Parent
Company undertakes, severally and not jointly, until the Completion Release
Date, to use its reasonable efforts to (i) cause Borrower to construct and
complete the Sulfide Project in all material respects in accordance with the
description of the Sulfide Project set forth in Schedule D to the MPA on or
prior to the Target Completion Date, (ii) cause the Borrower to achieve Full
Completion on or before the Target Completion Date (for the avoidance of doubt,
while it is the intention and objective of the Parent Companies that Full
Completion be achieved and that all commercially reasonable efforts be used to
achieve the same, this provision shall not require any Parent Company to cause
the Borrower to attempt to achieve Full Completion if it is commercially
unreasonable to do so) or (iii) if it is commercially unreasonable to cause the
Borrower to attempt to achieve Full Completion, cause the Borrower to achieve
Partial Completion on or before the


                                        8

Target Completion Date (for the avoidance of doubt, this provision shall not
require any Parent Company to cause the Borrower to attempt to achieve Partial
Completion if it is commercially unreasonable to do so), provided that this
provision shall not require any Parent Company to provide funding, incur or
guarantee indebtedness or undertake any financial obligation, except as
specifically set forth in Section 3.02. For purposes of this Section 3.01,
neither the level of copper prices at any particular time of itself, nor the
expected return on the incremental investment that may be required to achieve
either Full Completion or Partial Completion shall in and of itself constitute
sufficient grounds for a determination of the commercial reasonableness or
unreasonableness of the efforts to achieve either Full Completion or Partial
Completion, provided that the expected overall rate of return of each Parent
Company on the totality of its investments in the Project, including such
incremental investment, may be a sufficient factor in the determination of the
commercial reasonableness of efforts to achieve either Full Completion or
Partial Completion. The Parent Companies shall notify the Administrative Agent
in writing within 3 Business Days from the making of a determination that it is
commercially unreasonable to achieve Full Completion or Partial Completion, as
the case may be.

     3.02 Funding Obligations.

     (a) Subject to Article V hereof, until the Completion Release Date, the
Administrative Agent (acting at the direction of the Majority Lenders) or the
Borrower shall have the right to notify in writing the Parent Companies of the
existence and amount of a shortfall (including as a result of any cost overrun
or shortfall in the amount of cash flow generated from Current Operations as
compared to the amount of funds necessary to achieve Full Completion or Partial
Completion, if the Parent Companies notify the Administrative Agent that, in
accordance with Section 3.01, they have determined in good faith that it is
commercially unreasonable to continue to attempt to achieve Full Completion
(identifying the basis for such conclusion) and will proceed to attempt to
achieve Partial Completion) in available funds (a "Notified Cash Shortfall"),
taking into account all funds available under the Senior Loan Documents to the
Borrower and all anticipated revenues from Current Operations, to satisfy
amounts to become due and payable in the next Calculation Period to either (i)
achieve Full Completion or Partial Completion, as the case may be, or (ii) pay
Senior Loans Obligations then due and payable. The notice delivered by the
Administrative Agent or the Borrower, as the case may be, shall separately
identify the amounts of any shortfall required to complete the Sulfide Project,
in accordance with Section 3.01, and the amounts required to pay Senior Loans
Obligations, and shall serve as a request by the Administrative Agent or the
Borrower, as the case may be, for such additional funding to be provided by the
Parent Companies in accordance with Section 3.02(c).

     (b) Within 30 Business Days of receipt of such notification, any Parent
Company shall have the right to contest such determination and ask the
Independent Engineer to make a determination as to the existence and amount of
such Notified Cash


                                        9

Shortfall. If the Independent Engineer confirms the existence and amount of a
Notified Cash Shortfall or if the Parent Companies do not contest a Notified
Cash Shortfall determination by the Administrative Agent or the Borrower within
the above mentioned 30 Business Days period, such Notified Cash Shortfall shall
become a "Confirmed Cash Shortfall".

     (c) Subject to Article V hereof, each Parent Company shall be required to
contribute (directly or indirectly) additional funds to the Borrower in the form
of loans, ("Completion Loans"), in an amount equal to its Pro Rata Share of any
Confirmed Cash Shortfall. With respect to a given Confirmed Cash Shortfall, the
Parent Companies, at their discretion, shall decide the timing for the making of
such Completion Loans, so long as the proceeds thereof are contributed to the
Borrower by the Parent Companies at the same time and no later than the time
funds, not otherwise available under the Senior Loan Documents to the Borrower,
are required for the purpose set forth in clauses (i) and (ii) of paragraph (a).

     (d) The rights of each Parent Company against the Borrower with respect to
such Parent Company's Completion Loans shall be subordinated to the rights of
the Senior Lenders in accordance with the Terms of Subordination attached as
Exhibit A.

     (e) At the time of the making of any Completion Loan, the Parent Companies
shall enter into a pledge agreement substantially in the form attached hereto as
Exhibit B to pledge the Completion Loans to secure the Senior Loans.

     (f) The obligations of the Parent Companies to make Completion Loans shall
be several and shall terminate upon the occurrence of the Completion Release
Date.

     (g) Notwithstanding anything in this Agreement to the contrary, to the
extent that a Parent Company:

          (i) makes a Completion Loan relating to Section 3.02(a)(ii) the
     proceeds of which are applied to pay Senior Loans Obligations, such Parent
     Company's Completion Guarantee Obligation shall be deemed to be satisfied
     in respect of the Senior Loans Obligations to which such Confirmed Cash
     Shortfall relates, regardless of whether other Parent Companies make
     corresponding Completion Loans in respect of such Confirmed Cash Shortfall;

          (ii) provides the Borrower with, or directly purchases, its Pro Rata
     Share of the Purchased Principal Senior Loan Amounts pursuant to Section
     3.03(b), (x) such Parent Company's Completion Guarantee Obligation shall be
     deemed to be satisfied and (y) such Parent Company shall have no obligation
     to make a Completion Loan relating to Section 3.02(a)(ii), in each case, in
     respect of the Senior Loans Obligations to which such purchase relates,
     regardless of whether other Parent Companies provide the Borrower with
     their


                                       10

     respective Pro Rata Share, or make corresponding purchases, in respect of
     such Senior Loans Obligations, and

          (iii) makes a payment under its Completion Guarantee Obligation,
     pursuant to Section 4.01(a), such Parent Company shall have no obligation
     to make a Completion Loan relating to Section 3.02(a)(ii) in respect of
     Senior Loans Obligations to which such Completion Guarantee Obligation
     payment relates, regardless of whether other Parent Companies have made
     corresponding Completion Guarantee Obligation payments.

     3.03 Debt Buy-Down Option.

     (a) If Full Completion is not achieved on or before the Target Completion
Date, upon the achievement of Partial Completion on or prior to the Target
Completion Date the Parent Companies shall have the right, but not the
obligation, by delivery of written notice (the "Debt Buy-Down Notice") to the
Administrative Agent, no later than the date that is 30 Business Days before the
date that is twelve (12) months following the Target Completion Date, to
purchase, or cause to be prepaid, Senior Facility Loans (on a pro rata basis
based on the Outstanding Advance Amount of each Senior Facility Lender) in an
aggregate amount (the "Retired Principal Senior Loan Amount") sufficient to
ensure that the projected Annual DSCR with respect to each Calculation Period is
at least equal to 1.5X. The agreed methodology for the calculation of the
Retired Principal Senior Loan Amount is attached as Schedule A.

     (b) The Parent Companies shall cause the Borrower to calculate, and notify
to the Administrative Agent and the Senior Facility Lenders for their review,
the projected Annual DSCR and the Maximum Allowed Debt Amount. In case of
disagreement, the Administrative Agent (on its own behalf or upon the
instructions of any Senior Facility Lender) shall have the right within 10
Business Days to request that the Independent Public Accountants verify in
writing such computations and provide alternate computations, if necessary. The
Borrower and the Administrative Agent (acting at the direction of any Senior
Facility Lender) shall both instruct the Independent Public Accountants to
complete its verification and provide such alternate computations, if necessary,
within 10 Business Days from the date of such instruction. The calculation made
by the Independent Public Accountants shall be final absent manifest error.

     (c) Concurrently with the delivery by the Parent Companies of the Debt
Buy-Down Notice, the Parent Companies shall cause the Borrower to notify to the
Administrative Agent and the Senior Facility Lenders the Retired Principal
Senior Loan Amount. Within 15 Business Days from the Buy-Down Notice Date, the
Parent Companies shall have the right to notify in writing the Administrative
Agent of the aggregate amount (up to the Retired Principal Senior Loan Amount)
of Senior Facility Loans that they intend to purchase (the "Purchased Principal
Senior Loan Amount"). On the date that is 30 Business Days after the date of the
Debt Buy-Down Notice or on such


                                       11

other date (at least 15 Business Days following the date of the notification
contemplated in the previous sentence) as the Parent Companies and the
Administrative Agent (acting upon instructions of the Supermajority Facility
Lenders) agree (the "Debt Buy-Down Closing Date"):

          (i) Each Parent Company shall (directly or through a third party, in
     which case each reference to such Parent Company in subsection (c)(ii),
     (d)(ii) and (e) below shall be read as a reference to such third party)
     purchase its Pro Rata Share of the Purchased Principal Senior Loan Amount
     (on a pro rata basis among the Senior Facility Lenders based on their
     respective Outstanding Advance Amounts) at a purchase price (payable in
     cash and in immediately available funds) equal to 100% of such principal
     amount to be paid plus accrued and unpaid interest to the Debt Buy-Down
     Closing Date;

          (ii) each Senior Facility Lender shall sell to each Parent Company
     such portion of the Purchased Principal Senior Loan Amount to be purchased
     by such Parent Company from such Senior Facility Lender on such date and
     shall execute such documents as may be necessary to document the sale by
     such Senior Facility Lender to the Parent Companies of its pro rata share
     of the Purchased Principal Senior Loan Amount; and each Parent Company
     shall enter into a pledge agreement pledging such portion of the Purchased
     Principal Senior Loan Amount purchased by such Parent Company to secure the
     Senior Loans, and confirming the subordination of such Purchased Principal
     Senior Loan Amount as required by Section 3.02(e), in substantially the
     form attached as Exhibit B; and

          (iii) each Parent Company may cause the Borrower to prepay Senior
     Facility Loans in an amount (the "Prepaid Principal Senior Loan Amount")
     equal to the difference between the Retired Principal Senior Loan Amount
     and the aggregate portion of the Purchased Principal Senior Loan Amount
     purchased by all Parent Companies, provided that upon giving effect to such
     prepayment the Reserve Accounts are fully funded as contemplated in the MSA
     and the Borrower has cash on hand in the Proceeds Account (excluding funds
     credited to the Senior Debt Service Reserve Sub-Account, the Senior Debt
     Accumulation Sub-Account and insurance proceeds credited thereto that are
     subject to Section 3.06(b) of the MPA) to pay for at least 30 days of
     Operating Costs.

     (d) The Debt Buy-Down Release Date shall occur in any of the following
circumstances:

          (i) If the Maximum Allowed Debt Amount is greater than or equal to the
     Calculation Date Outstanding Amount, (x) 10 Business Days after
     notification by the Borrower to the Administrative Agent of its computation
     of the Maximum Allowed Debt Amount, if the Administrative Agent has not
     delivered a written notice requesting the Independent Public Accountants to
     verify such computation


                                       12

     by such time or (y) upon the notification by the Independent Public
     Accountants of their confirmation that the Maximum Allowed Debt Amount is
     greater than or equal to the Calculation Date Outstanding Amount; and

          (ii) If the Calculation Date Outstanding Amount is greater than the
     Maximum Allowed Debt Amount, (A) on such date as the Post Calculation Date
     Excess Repayment Amount equals or exceeds the Calculation Date Excess
     Amount or (B) on the Debt Buy-Down Closing Date, if the sum of the
     aggregate amount of Senior Facility Loans purchased and paid in full by the
     Parent Companies and the aggregate amount of Senior Facility Loans prepaid
     by the Borrower pursuant to Section 3.06(g) of the MPA, on or prior to such
     date, equals at least the Retired Principal Senior Loan Amount.

     (e) The rights of each Parent Company against the Borrower with respect to
such Parent Company's Purchased Principal Senior Loan Amount shall be
subordinated to the rights of the Senior Lenders in accordance with the Terms of
Subordination attached as Exhibit A.

     (f) The obligations of the Parent Companies on the Debt Buy-Down Closing
Date shall be several and shall terminate upon the occurrence of the Guarantee
Release Date.

                                   ARTICLE IV

                      GUARANTEE OF SENIOR LOANS OBLIGATIONS

     4.01 Guarantee of Senior Loans Obligations.

     (a) Subject to Article V, each Parent Company unconditionally and
irrevocably guarantees to each Senior Lender, on a several basis, the punctual
payment by the Borrower of such Parent Companies' Pro Rata Share of all Senior
Loans Obligations (each such obligation, as it may from time to time be amended
or waived in accordance with the Master Participation Agreement or the Peruvian
Bonds Indenture, as the case may be, a "Guaranteed Obligation"), whether now
existing or hereafter existing or due or to become due, so long as such
Guaranteed Obligations are due and payable on or prior to the Guarantee Release
Date and are not paid by the Borrower when and as the same shall become due and
payable, whether at maturity, upon acceleration or otherwise.

     (b) Each Parent Company agrees that its obligations under this Section 4.01
shall be unconditional and irrevocable, irrespective of the invalidity or
unenforceability of the Guaranteed Obligations, the absence of any action to
enforce the Guaranteed Obligations against Borrower, any waiver or consent by
any Senior Lender with respect to any provision of this Agreement or any other
Financing Document, the recovery of any judgment against the Borrower or any
action to enforce the same, the insolvency or


                                       13

bankruptcy of the Borrower or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.
Each Parent Company waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Borrower,
any right to require a proceeding first against the Borrower or against any
other Person under any guarantee of, or security for any Guaranteed Obligation,
protest, notice and all demands whatsoever or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor or
surety or otherwise impair the right of any Appointed Party or any Senior
Lender.

     (c) Each Parent Company agrees, subject to Article V and to Section
3.02(g), that its obligations under this Article IV with respect to any
Guaranteed Obligation will not be discharged except by complete payment by the
Borrower of such Guaranteed Obligation or by complete payment by such Parent
Company of its Pro Rata Share of any such Guaranteed Obligation. In the event
that any payment made by the Borrower to Senior Lenders in respect of any
Guaranteed Obligation is rescinded or must otherwise be returned for any reason
whatsoever, such payment shall be treated as a Guaranteed Obligation and each
Parent Company shall remain liable for such Guaranteed Obligation to the extent
provided herein as if such payment had not been made and:

          (i) if any of the Parent Companies' obligations under this Completion
     Guarantee have been terminated in accordance with this Agreement, such
     obligations shall be reinstated to the extent necessary for the Parent
     Company to comply with the foregoing provisions of this sentence; and

          (ii) each of the Parent Companies agrees that it will pay or reimburse
     each Appointed Party and each Senior Lender within 30 days of written
     request for its Pro Rata Share of all reasonable and documented costs and
     expenses (including, without limitation, reasonable and documented fees and
     disbursements of counsel) incurred by any such Appointed Party or any such
     Senior Lender, as the case may be, in connection with the rescission or
     restoration of the Completion Guarantee, including any such costs and
     expenses incurred in defending against any claim alleging that any payment
     constituted a preference, fraudulent transfer or similar payment under any
     bankruptcy, insolvency or similar law.

     (d) Each Parent Company agrees that any Senior Lender may at any time and
from time to time, either before or after the maturity thereof, without notice
to or further consent of such Parent Company, extend the time of payment of,
exchange or surrender, or fail to perfect, collateral for, or renew any of the
Guaranteed Obligations owed to it, and may also make any agreement with the
Borrower, for the extension, renewal, payment, compromise, discharge or release
thereof, in whole or in part, or for any modification of the terms thereof or of
any agreement between the Senior Lenders and


                                       14

the Borrower, without in any way impairing or affecting its obligations pursuant
to this Article IV.

     4.02 Payments Free and Clear of Taxes, Etc.

     (a) Any and all payments made by or on account of a Parent Company to a
Senior Facility Lender on account of a Guaranteed Obligation pursuant to this
Article IV, shall be made free and clear of, and without deduction or
withholding for or on account of, any and all present or future Indemnified
Taxes, now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority in Peru, the United States and Japan, unless such
deduction or withholding is required by applicable Government Rule, in which
case paragraph (b) below shall apply.

     (b) If a Parent Company shall be required by law to deduct any Indemnified
Taxes now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority in Peru, the United States, Germany or Japan from or in
respect of any sum payable hereunder or under the Senior Facility Loan
Agreements, such Parent Company shall, at its option, either (i) pay to the
Senior Facility Lender in respect of which such deduction or withholding is
required to be made, such Additional Tax Amount, as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to Additional Tax Amounts), such Senior
Facility Lender receives on the due date thereof an amount equal to the sum it
would have received, had no such deduction or withholding been made, or (ii) in
the case of Peruvian Taxes, assume the payment of the Indemnified Tax and pay
directly the full amount to the tax administration when due in accordance with
Article 47 of the Peruvian Income Tax Act, so that the amount paid to the Senior
Facility Lender equals the amount it would have received if the Borrower or the
Parent Companies (as applicable) had not been required by law to deduct such
Indemnified Tax.

     (c) Each Parent Company will indemnify the Administrative Agent and each
Senior Facility Lender against, and reimburse the Administrative Agent and each
Lender on demand for, any Indemnified Taxes paid directly by the recipient of a
payment made by such Parent Company with respect to which such Indemnified Tax
is levied in circumstances where such Parent Company has failed to comply with
its obligation to pay Additional Tax Amount as contemplated in Section 4.02(b)
and any loss, liability, claim or expense, including interest, penalties,
judgments, costs or disbursements and reasonable and documented legal fees,
which the Administrative Agent or any Senior Facility Lender may incur at any
time arising out of or in connection with any failure of such Parent Company to
make any payment of such Indemnified Taxes when due.

     (d) Each Senior Facility Lender shall, from time to time, following receipt
of a written request therefor by a Parent Company, furnish to such Parent
Company any form or certificate and other assistance reasonably requested that
may be necessary to


                                       15

establish any available exemption from, or reduction in the amount of,
Indemnified Taxes.

     4.03 Subrogation of Parent Companies to Rights of Senior Lenders Against
Borrower.

     (a) Each Parent Company shall be subrogated to all of the rights of the
Senior Lenders against the Borrower and its properties in respect of any amounts
paid by such Parent Company on account of Guaranteed Obligations under this
Article IV; provided, however, that the rights of each Parent Company on account
of such subrogation shall be subordinated to the Senior Loans in accordance with
the Terms of Subordination set forth as Exhibit A.

     (b) Notwithstanding their subrogation rights, no Parent Company shall have
the right to participate in voting decisions of the Senior Lenders so long as
the Senior Loans remain outstanding.

     4.04 Several Obligations. The obligations of the Parent Companies under
this Article IV shall be several and shall terminate upon the occurrence of the
Guarantee Release Date.

                                   ARTICLE V

                    SUSPENSION AND TERMINATION OF OBLIGATIONS
                     DUE TO EVENT OF POLITICAL FORCE MAJEURE

     5.01 Declaration of Event of Political Force Majeure; Suspension of
Obligations. Upon the Continuance of an Event of Political Force Majeure, the
Parent Companies shall have the right to declare that an Event of Political
Force Majeure has occurred and is Continuing by delivering a notice in
accordance with Section 5.03. In the event an Event of Political Force Majeure
is declared under this Section, or by the Senior Facility Lenders in accordance
with Section 11.01 of the Master Participation Agreement, the Completion
Guarantee Obligations shall be suspended automatically (subject to reinstatement
in accordance with Section 5.05 or termination in accordance with Section 5.02).

     5.02 Termination Due to Event of Political Force Majeure. Subject to
Section 5.05, the Parent Companies shall have the right, by delivering a notice
in accordance with Section 5.03, to terminate their respective Completion
Guarantee Obligations, at the election of the Parent Companies, if:

          (i) the Completion Guarantee Obligations shall have been suspended in
     accordance with Section 5.01, and


                                       16

          (ii) an Event of Political Force Majeure shall have occurred and be
     Continuing for a period of 360 days following such declaration.

     5.03 Notice by Parent Companies of Exercise of Suspension or Termination
Rights. In order for the Parent Companies to declare that an Event of Political
Force Majeure has occurred and is Continuing or to terminate their Completion
Guarantee Obligations pursuant to Section 5.02, the Parent Companies shall
deliver a certificate to each Senior Lender, setting forth in reasonable detail,
as applicable, (i) the events, conditions, circumstances or occurrences that
constitute an Event of Political Force Majeure, (ii) the type of Event of
Political Force Majeure which has occurred, (iii) the date as of which such
Event of Political Force Majeure has occurred, (iv) the provision hereunder
pursuant to which the Completion Guarantee Obligations are to be suspended or
terminated and (v) in the event of termination under Section 5.02, that such
Event of Political Force Majeure has Continued for the time period specified in
such clause.

     5.04 Arbitration. The Administrative Agent (acting pursuant to instructions
from the Majority Lenders) shall have 60 days after receipt of a certificate
delivered under Section 5.03 to deliver a notice to the Parent Companies to the
effect that the Senior Lenders (i) disagree that an Event of Political Force
Majeure has occurred and is Continuing and (ii) intend to commence arbitration
proceedings under Section 9.16 within 45 days of such notice. Each such notice
shall state in reasonable detail the bases for the Senior Lenders' disagreement.
If the Administrative Agent does not timely deliver a notice under this Section
or if such arbitration is not timely commenced by the Administrative Agent, a
certificate delivered under Section 5.03 shall be considered determinative of
the items addressed therein. Pending resolution of any arbitration proceedings,
the Completion Guarantee Obligations shall remain suspended unless such
Completion Guarantee Obligations are otherwise reinstated pursuant to Section
5.05.

     5.05 Reinstatement of Suspended Obligations.

     (a) The Completion Guarantee Obligations, if suspended in accordance with
Section 5.01 (and not terminated under Section 5.02), shall be reinstated in
full force and effect, and shall be enforceable as if no such suspension had
occurred, upon the earlier of (i) cessation of the Event of Political Force
Majeure giving rise to such suspension or (ii) determination by an arbitral
tribunal that the particular event or condition does not constitute an Event of
Political Force Majeure or that such event or condition has ceased. Thereafter,
the Completion Guarantee Obligations shall be reinstated in full force and
effect (unless and except to the extent that at such time the Completion
Guarantee Obligations shall have been suspended or terminated based upon a
different Event of Political Force Majeure).

     (b) If an Event of Political Force Majeure declared under Section 5.01 has
ceased, the Parent Companies shall immediately deliver a notice to the
Administrative Agent declaring that such Event of Political Force Majeure has
ceased. In the event a


                                       17

cessation notice is delivered under the preceding sentence, the Event of
Political Force Majeure shall be considered to have ceased (and the Completion
Guarantee Obligations unless otherwise suspended or terminated in accordance
with this Agreement shall be reinstated in full force and effect).

     (c) If the Parent Companies have not delivered such a notice, and the
Majority Lenders believe that such Event of Political Force Majeure has ceased,
the Majority Lenders may instruct the Administrative Agent to deliver to the
Parent Companies a notice stating that such Senior Lenders have determined that
such Event of Political Force Majeure has ceased. The notice delivered by the
Administrative Agent shall state in reasonable detail the bases for such Senior
Lender's determination. Within 30 days following delivery to the Parent
Companies of such notice, the Parent Companies may deliver to the Administrative
Agent, a notice stating that they disagree that such Event of Political Force
Majeure has ceased and intend to commence arbitration proceedings within 30 days
from the date of such notice.

          Such notice shall state in reasonable detail the bases for the Parent
Companies' disagreement. Any such arbitration shall be conducted as provided in
Section 9.16. The Parent Companies' Completion Guarantee Obligations shall
remain suspended pending resolution of the arbitration proceeding unless such
Completion Guarantee Obligations are otherwise reinstated or terminated pursuant
to this Article V.

          If such arbitration is commenced within such 30 days and the
arbitrators rule in favor of the Parent Companies, the Parent Companies'
Completion Guarantee Obligations shall remain suspended or be terminated, as the
case may be. If such arbitration is not commenced within such 30 days or the
arbitrators rule that such Event of Political Force Majeure has ceased, the
Parent Companies' Completion Guarantee Obligations shall be reinstated in full
force and effect and shall be enforceable as if no suspension had occurred
(unless and except to the extent that at such time (i) the Completion Guarantee
Obligations shall have been suspended or terminated based upon a different Event
of Political Force Majeure, or (ii) the Completion Guarantee Obligations have
been suspended, based upon the suspension by a Senior Lender, pursuant to
Section 11.01 of the Master Participation Agreement, of its obligations to make
additional Senior Loans, based upon a different Event of Political Force
Majeure).

     5.06 Limitations on Rights to Suspend or Terminate. Notwithstanding any
other provision of this Agreement, the occurrence of an Event of Political Force
Majeure shall not operate to suspend or terminate the Completion Guarantee
Obligations of the Parent Companies pursuant to this Article V if:

     (a) the occurrence of such Event of Political Force Majeure is proximately
caused by actions or omissions of the Borrower, the Parent Companies or any
Shareholder that constitute a breach in a material respect of any law, statute,
decree, writ or order of any Governmental Authority binding on it and relating
to the Business (except


                                       18

for contest, or the breach, of any such law, statute, decree, writ or order, the
adoption or application of which would (i) in the reasonable judgment of the
Borrower, the Parent Companies or any Shareholder constitute a breach of, or be
inconsistent with, the Stability Agreement or (ii) constitute an Event of
Political Force Majeure);

     (b) such Event of Political Force Majeure has been voluntarily agreed to
(which for this purpose shall not include coerced agreement), or voluntarily
arranged or provoked by the Borrower, the Parent Companies or any Shareholder or
any Affiliate thereof; or

     (c) the Borrower, the Parent Companies or any Shareholder has failed to
take reasonable precautions or pursue reasonable alternative measures available
to it to prevent or mitigate the effects of such Event of Political Force
Majeure; provided, however, that neither the Borrower, the Parent Companies or
any Shareholder shall be required by this clause (c) to accept, acquiesce in or
agree to any modification of any right, make any payment or concession it is not
legally obligated to make or enter into any settlement, compromise or agreement
with any Governmental Authority, labor union or other Person that it is not
legally obligated to enter into.

provided that this Section shall not apply to actions or omissions of the
Borrower to the extent that the Borrower is not under the control of the
Shareholders as controlling shareholder(s) of the Borrower (other than by reason
of voluntary acts of the Shareholders).

     5.07 Effect of Arbitration on Time Periods. If an arbitration commenced
pursuant to Section 5.04 is pending when the time period set forth in Section
5.02 expires and the Parent Companies deliver a termination certificate in
accordance with Section 5.03, such termination shall not become effective until
the conclusion of such arbitration (and then only if arbitrators rule
termination was permitted under this Agreement).

                                   ARTICLE VI

             REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES

     6.01 Representations and Warranties of the Parent Companies. Each Parent
Company represents and warrants to each Senior Facility Lender with respect to
itself that:

     (a) Organization. It is a corporation duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its incorporation
referred to in the recital of the parties at the beginning of this Agreement.


                                       19

     (b) Authority. It has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder in accordance with the terms
provided herein.

     (c) Binding Agreement. This Agreement has been duly authorized, executed
and delivered by it and constitutes a valid and legally binding agreement,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.

     (d) Consents and Approvals for this Agreement. All Governmental Approvals
which are necessary for the execution and delivery by it of this Agreement and
the performance of its obligations hereunder have been obtained and are in full
force and effect.

     (e) Conflicts. There is no provision of law, statute, regulation, rule,
order, injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Agreement.

     (f) No Immunity. Neither it nor any of its assets have any immunity (or
rights to claim that it has immunity) from jurisdiction of any court or from any
legal process (whether through service, notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise).

     (g) Financial Statements.

          (i) Its consolidated financial statements for the period ended June
     30, 2005 are true, complete and correct and fairly present in all material
     respects its financial condition as of the date thereof, all in accordance
     with Peruvian GAAP for BVN, United States GAAP for PDC and SC and Japanese
     GAAP for SMM (subject to normal year-end adjustments).

          (ii) Except as otherwise disclosed to the Senior Lenders in writing
     prior to the date hereof, since the date of such financial statements there
     has been no material adverse change in such Parent Company's financial
     condition.

     (h) Litigation. There is no action, suit, proceeding or investigation, at
law or in equity, or before any Governmental Authority or other Person, pending
or, to the best knowledge of such Parent Company, threatened, against or
affecting such Parent Company or its assets that (i) questions the validity of
this Agreement or any action taken or to be taken pursuant hereto or thereto, or
(ii) in any case or in the aggregate would


                                       20

reasonably be expected to result in a material adverse effect on the ability of
such Parent Company to comply with its obligations hereunder.

     (i) Ranking. Its obligations under this Agreement shall rank pari passu
with or senior to all other senior unsecured and unsubordinated obligations of
such Parent Company.

                                   ARTICLE VII

                        COVENANTS OF THE PARENT COMPANIES

     7.01 Net Worth. Until the earlier of (i) Guarantee Release Date and (ii)
the termination of the Completion Guarantee Obligations of a given Parent
Company, each Parent Company shall maintain a Net Worth at least equal to
U.S.$1,500,000,000 in the case of PDC, Y90,000,000,000 in the case of each of
SMM and SC, and U.S.$300,000,000 in the case of BVN.

     7.02 Financial Disclosure. Each Parent Company shall cause to be prepared
and deliver to the Administrative Agent the following financial information, to
the extent that it is not publicly available or filed with any stock exchange:

          (a) As soon as available but in no event more than 60 days after the
     end of each of the first three fiscal quarters of each fiscal year of such
     Parent Company, financial statements of such Parent Company consisting of
     an unaudited balance sheet of such Parent Company as of the close of such
     quarter and unaudited statements of income and expense and changes in
     financial position from the beginning of the then-current fiscal year to
     the close of such quarter, certified by an Authorized Officer of such
     Parent Company; and

          (b) As soon as available but in no event more than 120 days after the
     end of each fiscal year of such Parent Company, audited financial
     statements of such Parent Company consisting of a balance sheet as of the
     end of such fiscal year and a statement of income and expense and changes
     in financial position for such fiscal year, certified by the Independent
     Public Accountant

     The above financial statements shall be prepared in accordance with
Peruvian GAAP for BVN, United States GAAP for PDC and SC and Japanese GAAP for
SMM. No Parent Company shall have responsibility to deliver such financial
statements with respect to any other Parent Company.


                                       21

                                  ARTICLE VIII

                             PARENT COMPANY DEFAULTS

     8.01 Parent Company Defaults. Subject to Section 8.02, each of the
following events shall be a "PC Event of Default" with respect to the Parent
Company with respect to which such event occurs:

     (a) Payment Default. Any Parent Company fails to pay or cause to be paid,
or to have paid on its behalf, on the date on which the same is due and payable,
any amount payable under Article IV on account of a Guaranteed Obligation (and
no other Parent Company cures such breach in accordance with Section 8.02(b)
hereof), and such failure continues unremedied for (i) in the case of an amount
payable on account of Senior Loans Obligations that is principal, interest or
fees, three (3) Business Days from the date notice of such failure to pay was
received by such Parent Company; and (ii) in the case of an amount payable on
account of any other Senior Loans Obligations, five (5) Business Days from the
date notice of such failure to pay was received by such Parent Company.

     (b) Breach of Representation. A representation or warranty made by a Parent
Company hereunder shall prove to have been false when made in any material
respect and such breach of representation or warranty could reasonably be
expected to have a material adverse effect on the ability of the Parent Company
to comply with its obligations hereunder and is not corrected or cured within 10
Business Days after notice from the Administrative Agent (acting pursuant to
instructions from the Majority Lenders) specifying such breach and requiring
that it be remedied;

     (c) Breach of Covenant.

          (i) A Parent Company fails to comply with any of its covenants set
     forth in Sections 3.01 (Completion Undertaking), 3.02 (Funding
     Obligations), 7.01 (Net Worth) and 7.02 (Financial Disclosure) (and no
     other Parent Company timely cures such breach in accordance with Section
     8.02(b) hereof), and such failure continues unremedied for thirty days
     after notice thereof is given by the Administrative Agent (acting pursuant
     to instructions from the Majority Lenders) specifying such default and
     requiring that it be remedied; or

          (ii) Any of the Shareholders or the Parents is not in compliance with
     its share transfer restrictions set forth in Article II of the Transfer
     Restriction Agreement.

     (d) Bankruptcy. A Completion Guarantee Acceleration Event described in
clause (i) of the definition thereof occurs with respect to a Parent Company.


                                       22

     (e) Debt Buy-Down Failure. Partial Completion is achieved by the Target
Completion Date and the Parent Companies timely exercise their option to buy
down debt pursuant to Section 3.03 but a Parent Company fails to comply with its
obligations to purchase Senior Facility Loans on the Debt Buy-Down Closing Date
(and no other Parent Company cures such breach in accordance with Section
8.02(b) hereof).

     8.02 Exception to Section 8.01.

     (a) The occurrence and Continuance of any of the events listed in Section
8.01 while a Parent Company's Completion Guarantee Obligations are suspended
under Article V shall not constitute a PC Event of Default with respect to such
Parent Company (although if any such event is Continuing at the time of a
reinstatement of a Parent Company's Completion Guarantee Obligations in
accordance with Section 5.05, such event shall constitute a PC Event of Default
with respect to such Parent Company upon the expiration of any applicable grace
period commencing with the time such Parent Company's Completion Guarantee
Obligations are reinstated in accordance with Section 5.05).

     (b) Each Parent Company shall have the right to cure a PC Event of Default
with respect to another Parent Company. Such right shall include the right to
make payments to the Senior Lenders on behalf of a Defaulting Parent Company.

     8.03 Declaration of Event of Default.

     (a) Upon the receipt by the Administrative Agent of a certificate from any
Senior Lender stating that a PC Event of Default described in Section 8.01(a)
has occurred and remains uncured and identifying the Defaulting Parent Company
or Companies with respect to which such PC Event of Default has occurred, the
Administrative Agent (subject to Section 8.04 hereof), by written notice to the
Parent Companies and each Senior Lender in accordance with Section 9.08, shall
declare that a "PC Event of Default" has occurred with respect to each relevant
Defaulting Parent Company.

     (b) A "PC Event of Default" shall also occur without such declaration or
other notice, upon the occurrence of the PC Event of Default referred to in
Section 8.01(d) hereof with respect to the Parent Company affected by the event
described therein.

     (c) Upon the receipt by the Administrative Agent of a certificate approved
by the Majority Lenders stating that a PC Event of Default other than a PC Event
of Default referred to in Section 8.03(a) or 8.03(b) has occurred and remains
uncured and identifying the Defaulting Parent Company or Companies with respect
to which such PC Event of Default has occurred, the Administrative Agent
(subject to Section 8.04 hereof), by written notice to the Parent Companies and
each Senior Lender in accordance with


                                       23

Section 9.08, shall declare that a "PC Event of Default" has occurred with
respect to each relevant Defaulting Parent Company.

     8.04 Cessation of PC Event of Default; Rescission of Acceleration.

     (a) Cessation of PC Event of Default. (i) Any Senior Lender that has given,
or approved, a certificate or declared a PC Event of Default pursuant to Section
8.03 hereof agrees promptly to notify the Administrative Agent upon the
cessation of the PC Event of Default to which such certificate related of which
such Senior Lender has knowledge and (ii) so long as any PC Event of Default
described in clause (a) of Section 8.01 shall have been fully cured, the
Majority Lenders, in their discretion, may notify the Administrative Agent upon
the cessation of the PC Event of Default to which any certificate given or
approved pursuant to Section 8.03 relate and of which the Majority Lenders have
knowledge. Any notice given pursuant to this Section 8.04 is a "PC Cessation
Notice". The Administrative Agent shall promptly forward such PC Cessation
Notice to each Parent Company in accordance with Section 9.08. A PC Cessation
Notice shall be effective, (x) if it relates to a PC Event of Default declared
under Section 8.01(a), upon receipt by the Parent Companies, if it is approved
by the Senior Lender that has declared such PC Event of Default or the Majority
Lenders (in accordance with this Section 8.04(a)), and (y) otherwise, upon
receipt by the Parent Companies, if it is approved by the Majority Lenders.

     (b) Rescission of Acceleration. Upon the delivery of a PC Cessation Notice
to the Administrative Agent pursuant to clause (a) above, (i) the Requisite
Lenders giving such PC Cessation Notice (in the case of a PC Cessation Notice
that relates to a PC Event of Default declared pursuant to Section 8.03(a)
hereof) or (ii) the Majority Lenders (in the case of a PC Cessation Notice that
relates to any other PC Event of Default), as the case may be, may, in its or
their discretion, rescind and annul any acceleration (made during the
Continuance of such PC Event of Default) of Guaranteed Obligations, in which
case the Defaulting Parent Company shall be released from its obligations to pay
such accelerated Guaranteed Obligations, provided that no such rescission or
annulment described in this Section 8.04(b) shall (x) require any Senior Lender
to return any amount received by it during the Continuance of such PC Event of
Default and (y) affect the declaration of a PC Event of Default or the exercise
of any remedies exercisable upon the occurrence of such subsequent PC Event of
Default or impair any right of any Senior Lender with respect thereto.

     8.05 Remedies.

     (a) Subject to Section 8.02, at any time during the Continuance of a PC
Event of Default described in Section 8.01(a), which has been declared pursuant
to Section 8.03(a) hereof, the Administrative Agent, acting upon instructions
from the Majority Lenders, shall have the right by written notice to the
Defaulting Parent Company to require the Defaulting Parent Company to
immediately pay to such Senior


                                       24

Lender such Parent Company's Pro Rata Share of such Senior Lender's Outstanding
Advance Amount, without further notice and without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by the
Defaulting Parent Company.

     (b) Subject to Section 8.02, at any time upon the occurrence of the PC
Event of Default described in Section 8.01(d) hereof with respect to a
Defaulting Parent Company, such Defaulting Parent Company shall be immediately
required to pay its Pro Rata Share of all Senior Lenders' Outstanding Advance
Amounts, without further notice and without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Defaulting Parent Company.

     (c) Subject to Section 8.02, at any time upon the occurrence of a PC Event
of Default (other than a PC Event of Default described in Section 8.01(a) or
8.01(d)) with respect to a Defaulting Parent Company, the Administrative Agent
(acting upon instructions from the Majority Lenders) shall have the right to
require such Defaulting Parent Company to immediately pay its Pro Rata Share of
all Senior Lenders' Outstanding Advance Amounts, without further notice and
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Defaulting Parent Company.

     (d) Subject to Section 8.02, (i) upon the occurrence of any PC Event of
Default described in Section 8.01(a), the Majority Lenders, (ii) upon the
occurrence of the PC Event of Default described in Section 8.01(d), any Senior
Lender and (iii) upon the occurrence of a PC Event of Default (other than a PC
Event of Default described in Section 8.01(a) or 8.01(d)), the Majority Lenders,
in each case, shall have the right to request the Administrative Agent to take
any and all PC Enforcement Actions by delivering a notice identified as a Parent
Company enforcement direction (a "PC Enforcement Direction").

     8.06 Control of PC Enforcement Action by Administrative Agent. If the
Senior Lenders have sent to the Administrative Agent a PC Enforcement Direction
(the Senior Lenders sending such PC Enforcement Direction, the "PC Enforcing
Lenders"), together with an indemnity or other arrangement to reimburse
satisfactory to the Administrative Agent, provided that neither the Peruvian
Bondholders nor the Common Representative shall be required to indemnify the
Administrative Agent in an amount in excess of the proceeds recovered by the
Common Representative on behalf of the Peruvian Bondholders as a result of such
PC Enforcement Action, then:

          (i) The Administrative Agent shall exercise its rights and powers
     vested in it by this Agreement or by the Transfer Restrictions Agreement
     which it is directed by the PC Enforcing Lenders to exercise against the
     Parent Companies and shall not be liable with respect to any action taken
     or omitted to be taken by it in accordance with such PC Enforcement
     Direction; and


                                       25

          (ii) The PC Enforcing Lenders shall have the right to direct the time,
     method and place of conducting any proceeding for any remedy available to
     the Administrative Agent, or exercising any power conferred upon the
     Administrative Agent hereunder; provided that (i) such direction shall not
     be in conflict with applicable law, this Agreement or any of the other
     Financing Documents and (ii) the Administrative Agent may take any other
     action incidental to carrying out any such direction.

     8.07 Limitation on Enforcement Action.

     (a) No Senior Lender (except by a PC Enforcement Direction properly taken
hereunder or as provided in this Section) shall have the right in respect of
this Agreement or the Transfer Restrictions Agreement to take any PC Enforcement
Action against the Parent Companies, it being understood and intended that no
Senior Lender shall have any rights in any manner whatsoever to affect, disturb
or prejudice the rights of any of the other Senior Lenders, or to obtain or seek
to obtain priority or preference over any other Senior Lender or to enforce any
rights under this Agreement or the Transfer Restrictions Agreement, except in
the manner herein provided.

     (b) Notwithstanding the provisions of paragraph (a) above, each Senior
Lender shall have the right, without the consent of or participation by the
Administrative Agent or any other Senior Lender, when permitted under the terms
of this Agreement or the Transfer Restrictions Agreement, to (i) institute any
proceeding, judicial or otherwise against any Defaulting Parent Companies (other
than a proceeding under bankruptcy law or other reorganization, arrangement,
rearrangement of debt, relief of debtors, dissolution, insolvency, liquidation
or similar law or for the appointment of a receiver, trustee or other officer or
representative of a court or creditors), and to (ii) obtain a judgment and/or an
order of attachment or other similar document issued by any court of competent
jurisdiction, in each case, to the extent, but only to the extent, necessary to
preserve such Senior Lender's rights against such Defaulting Parent Company
which are in peril of losing their legal validity due to the impending or
anticipated expiration of any applicable statute of limitations or similar law
limiting the period of time in which legal action must be taken or commenced;
provided that such Senior Lender may not take any action to enforce any such
judgment or order of attachment against such Defaulting Parent Company.

     (c) If (i) the PC Enforcing Lenders have given a PC Enforcement Direction
to the Administrative Agent, (ii) the PC Enforcing Lenders have offered to the
Administrative Agent an indemnity or other arrangement to reimburse reasonably
satisfactory to it against the costs, expenses and liabilities to be incurred in
compliance with such direction, and (iii) the Administrative Agent, for 30 days
after its receipt of such PC Enforcement Direction, has failed to institute any
proceeding, then, unless a successor Administrative Agent shall have been
appointed within 30 days thereafter pursuant to the Master Participation
Agreement, the PC Enforcing Lenders acting by


                                       26

themselves may take, or agree that one or more PC Enforcing Lender may take, any
PC Enforcement Action that the Administrative Agent is authorized to take
hereunder.

     (d) At any time after a PC Enforcement Direction has been properly given,
Senior Lenders may agree upon any other manner or method of preserving,
enforcing or collecting Guaranteed Obligations, whether or not provided for or
contemplated herein, provided that (i) any such agreement which would result in
payment or satisfaction of Guaranteed Obligations on a basis which does not
constitute a Pro Rata Payment shall require the consent of all Senior Lenders,
(ii) the Administrative Agent shall be notified of any such agreement and (iii)
any such agreement shall not adversely affect any of the Administrative Agent's
rights or indemnities under this Agreement or any Financing Document or enlarge
its duties hereunder or thereunder.

                                   ARTICLE IX

                                  MISCELLANEOUS

     9.01 Subordination of the Parent Companies. The rights of each Parent
Company against the Borrower with respect to Completion Loans, Purchased
Principal Senior Loan Amount and resulting from any amounts paid by such Parent
Company on account of Guaranteed Obligations under Article IV or Article VIII
(collectively, the "PC Reimbursement Rights") shall be pledged for the benefit
of the Senior Lenders and shall be subordinated to the rights of the Senior
Lenders in accordance with the Terms of Subordination attached in Exhibit A. The
Parent Companies acknowledge and agree that all payments by the Borrower to the
Parent Companies on account of PC Reimbursement Rights shall be Restricted
Payments and shall be made only to the extent the Borrower is allowed to make
Restricted Payments pursuant to the Master Participation Agreement (a "Permitted
Subordinated Payment") and that they shall not initiate any proceedings against
the Borrower with respect to the Collateral until payment in full of all Senior
Loans. In the event that, notwithstanding the foregoing, a Parent Company
receives on account or in respect of its PC Reimbursement Rights any
distribution of assets by the Borrower or payment by or on behalf of the
Borrower of any character, whether in cash, securities or other property, that
is not a Permitted Subordinated Payment, it shall hold in trust (as property of
the Senior Lenders) for the benefit of, and shall, no later than five Business
Days after receipt thereof, pay over or deliver to, the Senior Lenders such
distribution or payment in the form received (except for the endorsement or
assignment by a Parent Company where necessary) for application in accordance
with (i) the Master Participation Agreement and the Senior Facility Loan
Agreements, in the case of Senior Facility Lenders Documents or (ii) the
Peruvian Bonds Indenture, in the case of Peruvian Bondholders.


                                       27

     9.02 Accession.

     (a) On the Bonds Closing Date, if any, the Common Representative shall
become a party to this Agreement by entering into, in its capacity as Common
Representative, a New Party Accession Agreement, and thereupon the Peruvian
Bondholders, acting through the Common Representative, shall collectively have
all the rights and obligations of a Senior Lender.

     (b) A Replacement Lender or a Bridge Loan Provider, as the case may be, may
become a party to this Agreement by entering into a New Party Accession
Agreement and thereupon such Replacement Lender or Bridge Loan Provider, as the
case may be, shall have all the rights and obligations of a Senior Facility
Lender.

     9.03 Termination of Agreement.

     (a) This Agreement shall terminate as to any Parent Company upon the
earliest of (i) 30 Business Days after Full Completion, (ii) the occurrence of
the Debt Buy-Down Release Date, (iii) the termination of the obligations of the
Parent Companies in accordance with Section 5.02, (iv) after the Availability
Period End Date or the earlier termination by the Senior Lenders of their
Commitments, full payment by such Parent Company of its Pro Rata Share of the
Guaranteed Obligations or full payment by the Borrower of all Senior Loans
Obligations, and (v) the date on which the Master Security Agreement shall
terminate in accordance with its terms, provided that in the case of a
termination pursuant to clause (i) or (ii), if the Senior Lenders timely
initiate a Completion Arbitration, this Agreement shall survive until such
Completion Arbitration is finally resolved.

     (b) Upon the termination of this Agreement, all of the obligations of each
Parent Company under this Agreement shall terminate, and no Parent Company shall
have any further liability hereunder to the Senior Lenders, except with respect
to obligations that arose prior to the termination of this Agreement and
obligations provided under Sections 4.02, 9.05, 9.16 and 9.18, which shall
survive any such termination.

     9.04 Currency Equivalents. Calculation of currency equivalents shall be as
set forth in Section 12.06 of the Master Participation Agreement.

     9.05 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     9.06 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable, the CG Parties agree to the fullest extent they may
effectively do so that the validity, legality and enforceability of the
remaining provisions shall not in any way


                                       28

be affected or impaired thereby, and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

     9.07 Entire Agreement. This Agreement and the other PC Agreements
constitute the entire agreement and understanding, and supersede all prior
agreements and understandings (both written and oral), between the Parent
Companies and the Senior Lenders with respect to the financing by the Senior
Lenders of the Sulfide Project and there are no warranties, representations or
other agreements between the CG Parties hereto in connection with the subject
matter hereof except as specifically set forth herein and therein.

     9.08 Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such party (any such communication that is
not in writing shall be confirmed in writing):

     If to PDC, at:

          Phelps Dodge Tower
          1 North Central Avenue
          Phoenix, Arizona 85004
          U.S.A.
          Attention: Treasurer
          Telephone: (602) 366-8100
          Facsimile: (602) 366-8150

     If to SMMC, at:

          11-3, 5-Chome, Shimbashi
          Minato-ku, Tokyo 105
          Japan
          Attention: Mineral Resources Division
          Telephone: 81-3-3436-7805
          Facsimile: 81-3-3436-7737


                                       29

     If to SC, at:

          11-1, Kandanishikicho 3-Chome
          Chiyoda-ku, Tokyo 101
          Japan
          Attention: Non-Ferrous Raw Materials Dept.
          Telephone: 81-3-3296-3382
          Facsimile: 81-3-3296-3289

     If to BVN, at:

          Cia. De Minas Buenaventura S.A.A.
          Carlos Villaran 790
          Urb, Santa Catalina, Lima 13, Peru
          Attention: President
          Telecopier: (51)-1-471-7349

     If to a Senior Lender or to the Administrative Agent, at the address or
telex or facsimile numbers set forth in Section 9.04 of the Master Security
Agreement.

     Any notice to be delivered, determination to be made or action to be taken
by the Parent Companies under this Agreement shall be delivered, made or taken
on behalf of the Parent Companies by PDC, unless PDC, SMM, SC and BVN jointly
notify the Administrative Agent otherwise.

     9.09 Successors and Assigns.

     (a) This Agreement shall be binding upon and inure to the benefit of the
Parent Companies, the Administrative Agent and the Senior Lenders and their
respective successors and assigns, except that the Parent Companies may not
assign or transfer any of their rights or obligations under this Agreement
without the prior written consent of the Administrative Agent (acting upon
instructions from each Senior Lender).

     (b) The Common Representative and/or Replacement Lender shall become a CG
Party as contemplated under Section 9.02.

     (c) The rights of a Peruvian Bondholder shall be transferred to a
transferee of Peruvian Bonds.

     (d) Upon prior written notice to each Parent Company and the Administrative
Agent, each Senior Facility Lender may assign its rights hereunder to any other
lender, to which such Senior Facility Lender makes a transfer of an Advance
permitted under Section 12.13 of the Master Participation Agreement.


                                       30

     9.10 Benefits of Agreement. Nothing in this Agreement, express or implied,
shall give to any Person, other than the CG Parties and their successors and
permitted assigns, any benefit or any legal or equitable right or remedy under
this Agreement.

     9.11 Remedies.

     (a) Other than as stated expressly herein, no remedy herein conferred upon
the Senior Lenders is intended to be exclusive of any other remedy and each and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise.

     (b) No failure on the part of any Senior Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement shall operate as a waiver thereof nor shall any
single or partial exercise of any right, power or privilege under any such
document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. No Senior Lender shall be responsible for the
failure of any other Senior Lender to perform its obligations hereunder or under
any Senior Loan Agreement.

     (c) In case any Senior Lender shall have proceeded to enforce any right,
remedy or power under this Agreement and the proceeding for the enforcement
thereof shall have been discontinued or abandoned for any reason or shall have
been determined adversely to such Senior Lender, then and in every such case the
Borrower and the Senior Lenders shall, subject to any effect of or determination
in such proceeding, severally and respectively be restored to their former
positions and rights hereunder.

     9.12 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different CG Parties on separate counterparts,
each of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.

     9.13 Consent to Jurisdiction.

     (a) Each Parent Company hereby irrevocably consents and agrees, for the
benefit of each party hereto, that any legal action, suit or proceeding against
it with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Agreement may be brought in any
Federal or State court located in New York County in the City of New York and
hereby irrevocably accepts and submits to the non-exclusive jurisdiction of such
court with respect to any such action, suit or proceeding. Each Parent Company
hereby waives any objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions, suits or proceedings, brought in any such
court and hereby further waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought therein has been brought
in an inconvenient forum.


                                       31

     (b) Each Parent Company hereby irrevocably appoints CT Corporation, with
offices at the date of this Agreement at 111 Eighth Avenue, New York, New York,
U.S.A., as its authorized agent on which any and all legal process may be served
in any such action, suit or proceeding brought in any Federal or State court
located in New York County in the City of New York. Each Parent Company agrees
that service of process in respect of it upon such agent, together with written
notice of such service given to it in the manner provided in Section 9.08
hereof, shall be deemed to be effective service of process upon it in any such
action, suit or proceeding. Each Parent Company agrees that the failure of such
agent to give notice to it of any such service shall not impair or affect the
validity of such service or any judgment rendered in any action, suit or
proceeding based thereon. If for any reason such agent shall cease to be
available to act as such, each Parent Company agrees to designate a new agent in
New York County in the City of New York, on the terms and for the purposes of
this Section 9.13. Nothing herein shall be deemed to limit the ability of any
party hereto to serve any such legal process in any other manner permitted by
applicable law or to obtain jurisdiction over the Parent Companies or bring
actions, suits or proceedings against them in such other jurisdictions, and in
such manner, as may be permitted by applicable law.

     9.14 Amendments and Waivers.

     (a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) each Parent Company and (ii) the Administrative Agent, acting in accordance
with Section 6.03 of the Master Security Agreement.

     (b) No waiver by any CG Party of any of its rights, powers and privileges
under this Agreement shall be effective other than pursuant to a written
instrument executed by the CG Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Lenders can
be executed by the Administrative Agent acting in accordance with Section 6.03
of the Master Security Agreement.

     9.15 Effectiveness. This Agreement shall come into full force and effect
upon its execution and delivery by each of the CG Parties named on the signature
pages hereof.

     9.16 Arbitration.

     (a) Notwithstanding Section 9.13, any dispute regarding (i) the occurrence,
continuance or cessation of an Event of Political Force Majeure or (ii) the
accuracy of a Completion Certificate shall be determined by arbitration between
the Parent Companies, on the one hand, and Senior Lenders on the other hand, in
accordance with the UNCITRAL Arbitration Rules in effect on the date the
arbitration is commenced. Such arbitration shall be the exclusive method for
resolution of the dispute, and the determination of the arbitrators shall be
final and binding (except to the extent there exist


                                       32

grounds for modification, vacatur, remand, nonenforcement or similar judicial
action respecting an award under the applicable laws governing the recognition
or enforcement of arbitral awards) on the Parent Companies and all Senior
Lenders. The CG Parties agree that, subject to those laws, they will give
conclusive effect to the arbitrators' determination and award and that judgment
thereon may be entered by any court having jurisdiction. The arbitral tribunal's
authority, if any, to determine its own jurisdiction does not affect the
competent court's power to review the arbitration award (including as to matters
of the arbitral tribunal's assertion of jurisdiction) nor shall such authority
by the arbitral tribunal deprive an enforcement court of the authority to review
the arbitral tribunal's assertion of jurisdiction. Each CG Party shall bear its
own costs in any such arbitration, provided that, if the arbitral tribunal
concludes that any CG Party shall have acted unreasonably it may, in its
discretion, award costs against such CG Party.

     (b) The number of arbitrators shall be three, each of whom shall be
disinterested in the dispute or controversy and shall be impartial with respect
to all parties hereto and independent thereof. Within 30 days of the initiation
of the arbitration, the Parent Companies and the Administrative Agent (acting
upon instructions from the Majority Lenders) shall each appoint one arbitrator
and the third arbitrator, who shall serve as the chair of the arbitral tribunal,
shall be appointed in accordance with the UNCITRAL Arbitration Rules in effect
on the date the arbitration is commenced. Should the services of an appointing
authority be necessary, the appointing authority shall be the American
Arbitration Association.

     (c) The place of arbitration shall be New York, New York, United States of
America. The arbitration shall be conducted in the English language and any
documents or portions thereof presented at such arbitration in a language other
than English shall be accompanied by an English translation thereof. The
arbitrators shall give effect insofar as possible to the desire of the parties
hereto that the dispute or controversy be resolved in accordance with good
commercial practice. The arbitrators shall decide such dispute in accordance
with the law of the State of New York, without regard to the conflicts of law
principles thereof, provided that the arbitration and this arbitration agreement
shall be governed by Title 9 (Arbitration) of the United States Code.

     (d) If a Parallel Arbitration is commenced under clause (a) of this Section
with respect to a dispute regarding the occurrence, continuance or cessation of
a given Event of Political Force Majeure, and if, at any time, there shall also
be pending a Lead Arbitration with respect to a dispute regarding the
occurrence, continuance or cessation of the same Event of Political Force
Majeure, the Lead Arbitration shall have priority and the parties to the
Parallel Arbitration shall take all reasonable steps to obtain a stay of the
Parallel Arbitration, which stay shall remain in effect pending the issuance of
any award or awards in the Lead Arbitration and, further, pending the conclusion
of any judicial proceedings to enforce, vacate, modify, or remand the award as
provided by law. Subject to the conclusion of those judicial proceedings, if
any, and the rights of the


                                       33

parties to the Lead Arbitration to contest any arbitral award or its enforcement
as provided by law, any arbitral award entered in the Lead Arbitration shall be
dispositive of any dispute regarding the occurrence, continuance or cessation of
the Event of Political Force Majeure that was the subject of the Parallel
Arbitration and the tribunal in the Parallel Arbitration shall enter into an
award determinative between the CG Parties in accord with the determination in
the Lead Arbitration.

     (e) The CG Parties agree that it is of paramount importance that disputes
regarding the accuracy of Completion Certificates be resolved expeditiously, and
they therefore charge the arbitral tribunal to schedule submissions, adjust the
schedule, set deadlines and otherwise conduct the proceedings in a manner
designed to reach a final award within 45 days from the constitution of the
arbitral tribunal, consistent with the opportunity for the tribunal to fully
inform itself and the right of the CG Parties to be fully heard. The failure of
the arbitral tribunal to reach an award within such period of time will not
affect its jurisdiction or authority to render a valid award.

     9.17 No Trial by Jury. Each Party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

     9.18 No Partnership. Nothing contained in this Agreement and no action by
any of the CG Parties is intended to constitute or shall be deemed to constitute
among such CG Parties a partnership, association, joint venture or other entity.

     9.19 Expenses. In the event of a PC Event of Default, such Defaulting
Parent Company shall pay all reasonable out-of-pocket expenses of the
Administrative Agent and the Senior Lenders (including the reasonable fees and
expenses of counsel for the Administrative Agent or Senior Lenders) incurred in
connection with seeking advice with respect to compliance issues hereunder or
the enforcement of this Agreement against it. Each Parent Company that is not in
compliance with its obligations hereunder shall pay all of its pro rata share of
documented out-of-pocket expenses of the Administrative Agent and the Senior
Lenders (including reasonable fees and expenses of legal counsel) incurred in
connection with the enforcement of any provision of this Agreement and the
collection of any amount due hereunder. For the purpose of this provision, the
pro rata share of a non compliant Parent Company shall be determined by dividing
the Pro Rata Share of such Parent Company by the Pro Rata Shares of all
non-compliant Parent Companies.

     9.20 No Immunity. To the extent that any CG Party has or hereafter may
acquire any immunity (sovereign or otherwise), from any legal action, suit or
proceedings, from jurisdiction of any court or from set-off or any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution of judgment, execution of judgment or otherwise) with respect
to itself or any of its property, such CG Party hereby irrevocably waives and
agrees not to plead or claim such


                                       34

immunity in respect of its obligations under this Agreement or the subject
matter hereof or thereof (including, without limitation, any obligation for the
payment of money). The CG Parties hereby agree that the waivers set forth in
this Section 9.20 shall have the fullest effect permitted under the Foreign
Sovereign Immunities Act of 1976 of the United States, as amended, and are
intended to be irrevocable and not subject to withdrawal for purposes of such
Act. The foregoing waiver shall constitute a present waiver of immunity at any
time that any action is initiated against such CG Party with respect to this
Agreement.

                  [Remainder of Page Intentionally Left Blank]


                                       35

     IN WITNESS WHEREOF, the CG Parties have caused this Agreement to be duly
executed as of the date first above written.

                                        SUMITOMO METAL MINING CO., LTD.


                                        By: /s/ Ichiro Abe
                                            ------------------------------------
                                        Name: Ichiro Abe
                                        Title: Managing Executive Officer


                                        SUMITOMO CORPORATION


                                        By: /s/ Mitsuhiko Yamada
                                            ------------------------------------
                                        Name: Mitsuhiko Yamada
                                        Title: Corporate Officer


                                        COMPANIA DE MINAS BUENAVENTURA S.A.A.


                                        By: /s/ Roque Benavides
                                            ------------------------------------
                                        Name: Roque Benavides
                                        Title: President & CEO


                                        PHELPS DODGE CORPORATION


                                        By /s/ Ramiro G. Peru
                                           -------------------------------------
                                        Name: Ramiro G. Peru
                                        Title: Executive Vice President &
                                               Chief Financial Officer


                                        By: /s/ Stanton K. Rideout
                                            ------------------------------------
                                        Name: Stanton K. Rideout
                                        Title: Vice President & Treasurer


                                       36

                                        JAPAN BANK FOR INTERNATIONAL COOPERATION


                                        By: /s/ Akira Ogawa
                                            ------------------------------------
                                        Name: Akira Ogawa
                                        Title: Director General - Energy and
                                               Natural Resources Finance
                                               Department


                                        SUMITOMO MITSUI BANKING CORPORATION


                                        By: /s/ Takashi Shimahara
                                            ------------------------------------
                                        Name: Takashi Shimahara
                                        Title: Joint General Manager -
                                               Structured Finance Department


                                        THE BANK OF TOKYO-MITSUBISHI, LTD.


                                        By: /s/ Hiroaki Makino
                                            ------------------------------------
                                        Name: Hiroaki Makino
                                        Title: Senior Manager - Structured
                                               Finance Division


                                        KfW


                                        By: /s/ Wolfgang Behler
                                            ------------------------------------
                                        Name: Wolfgang Behler
                                        Title: First Vice President


                                        By: /s/ Stephan Pueschel
                                            ------------------------------------
                                        Name: Stephan Pueschel
                                        Title: Senior Project Manager


                                       37

                                        CALYON NEW YORK BRANCH


                                        By: /s/ Georges Romano
                                            ------------------------------------
                                        Name: Georges Romano
                                        Title: Managing Director


                                        By: /s/ Samuel Sherman
                                            ------------------------------------
                                        Name: Samuel Sherman
                                        Title: Director


                                        THE ROYAL BANK OF SCOTLAND PLC


                                        By: /s/ Gregor Hamilton
                                            ------------------------------------
                                        Name: Gregor Hamilton
                                        Title: Associate Director


                                        MIZUHO CORPORATE BANK, LTD.


                                        By: /s/ Masatoshi Abe
                                            ------------------------------------
                                        Name: Masatoshi Abe
                                        Title: Senior Vice President


                                        THE BANK OF NOVA SCOTIA


                                        By: /s/ Michael K. Eddy
                                            ------------------------------------
                                        Name: Michael K. Eddy
                                        Title: Director-Mining


                                        By: /s/ Alexander Mihailovich
                                            ------------------------------------
                                        Name: Alexander Mihailovich
                                        Title: Associate


                                       38

                                        CALYON NEW YORK BRANCH, as
                                        Administrative Agent


                                        By: /s/ Samuel Sherman
                                            ------------------------------------
                                        Name: Samuel Sherman
                                        Title: Director


                                        By: /s/ Ted Vandermel
                                            ------------------------------------
                                        Name: Ted Vandermel
                                        Title: Director


                                       39

                                                                      Schedule A

                   METHODOLOGY FOR CALCULATION OF THE RETIRED
                          PRINCIPAL SENIOR LOAN AMOUNT

The Retired Principal Senior Loan Amount shall be calculated according to the
following procedure:

- -    The values describing Borrower's performance contained in the Financial
     Model on the OpInput sheet will be updated, with the participation and
     concurrence of the Independent Engineer, based on annualized results
     obtained over either (i) the Completion Test Period or (ii) the Completion
     Test Period and the subsequent three-month period, if, during such
     subsequent three-month period, the Borrower continues to operate the
     Business in accordance with the Mine Plan in effect during the Completion
     Test Period and the Independent Engineer has been given an opportunity to
     monitor operations during such period (the period described in (i) or (ii),
     as the case may be, the "Observation Period").

- -    The performance values to be updated and their effects on budget amounts
     for future years will be based on an audit of mine and mill production
     records and G&A records, including operating fixed and variable consumption
     items, for the Observation Period. The Independent Engineer will work with
     Borrower's budgeting personnel at the project site, and with Phoenix
     modeling personnel to verify and concur with performance values and effects
     to be input.

- -    The Financial Model will be the Financial Model referred to in the MPA, and
     the Mine Plan utilized will be the Current Mine Plan on which the Partial
     Completion Certificate was based.

- -    Unit prices for inputs and commodity prices shall be the same as in the
     Base Case Assumptions. Loan margins will be adjusted to reflect the actual
     margins on the Senior Loans. Assumed base interest rates, tax consequences
     and capital expenditure schedules in the Financial Model will remain
     unchanged.

- -    If it has been established in a final nonappealable judgment (or in a
     determination by any Governmental Authority that Borrower has not
     challenged or has ceased to challenge) that the exemption from the royalty
     tax is not available with respect to part of the operations of the
     Borrower, the Base Case Assumptions shall be revised to reflect the fact
     that revenues from such operations will be subject to such royalty tax.

- -    The Financial Model shall be used to compute the maximum amount of Total
     Debt (the "Maximum Allowed Debt Amount") (Cell labeled "Max Debt" of the


                                       A-1

     FinAsmps sheet) outstanding as of the last day of the Observation Period
     (the "Calculation Date") that yields an Annual DSCR for each Remaining
     Calculation Year of not less than 1.5X (as per line 80 of the executive
     summary sheet).

- -    If the Maximum Allowed Debt Amount is greater than or equal to the
     outstanding principal amount of all Senior Loans (the "Calculation Date
     Outstanding Amount") on the Calculation Date, the Retired Principal Senior
     Loan Amount shall be equal to zero.

- -    If the Calculation Date Outstanding Amount is greater than the Maximum
     Allowed Debt Amount:

     (i) the difference between the Calculation Date Outstanding Amount and the
     Maximum Allowed Debt Amount shall be referred to as the "Calculation Date
     Excess Amount";

     (ii) on the date of the Debt Buy-Down Notice (the "Buy-Down Notice Date"),
     the difference (the "Post Calculation Date Excess Repayment Amount")
     between (x) all payments and/or prepayments of principal on the Senior
     Loans made by Borrower between the Calculation Date and the Buy-Down Notice
     Date and (y) all payments of principal that would have been made on the
     Maximum Allowed Debt Amount between the Calculation Date and the Buy-Down
     Notice Date based on the Repayment Schedule shall be calculated; and

     (iii) on the Buy-Down Notice Date, the Retired Principal Senior Loan Amount
     shall be calculated and shall be equal to the difference between the
     Calculation Date Excess Amount and the Post Calculation Date Excess
     Repayment Amount.

- -    The Retired Principal Senior Loan Amount shall be applied as a pro-rata
     reduction of all tranches of Senior Facility Loans.


                                      A-2

                                                                       EXHIBIT A

                             TERMS OF SUBORDINATION

1.   Each of the Subordinated Lender(s) and the Borrower agrees that the
     Subordinated Obligations (as defined below) are and shall be subordinated,
     to the extent and in the manner hereinafter set forth, to the prior payment
     in full of all Senior Loan Obligations. For the purposes of this Agreement,
     the Senior Loan Obligations shall not be deemed to have been paid in full
     until and unless the Senior Lenders have received payment of the Senior
     Loan Obligations in full in cash.

2.   Until all Senior Loan Obligations shall have been paid and satisfied in
     full:

     (a)  The Borrower shall not, directly or indirectly, make any payment of
          principal or interest or any other payment whatsoever on account of,
          or transfer any collateral for the security of any part of, any
          obligations (including, without limitation, all indebtedness, payment
          of principal, interest, fees, expenses and costs, direct or indirect,
          absolute or contingent, due or to become due, now existing or
          hereafter arising) owing to any of the Subordinated Lenders (the
          "Subordinated Obligations") at any time during the Continuance of a
          Borrower Event of Default. If no Borrower Event of Default has
          occurred and is Continuing, the Borrower may make payments on account
          of the Subordinated Obligations only with funds available for
          distribution by the Borrower under Section 4.09 of the Master Security
          Agreement, provided that the Borrower may only pay such Subordinated
          Obligations if and to the extent permitted by Section 7.20 of the
          Master Participation Agreement;

     (b)  No Subordinated Lender shall sue for, or demand or accept from the
          Borrower or any other Person any such payment (in whole or in part) or
          collateral, nor take any other action to enforce or collect upon any
          such payment (in whole or in part) or to enforce its rights in respect
          of the Subordinated Obligations or any security thereof, nor cancel,
          set off or otherwise discharge any part of the Subordinated
          Obligations; and

     (c)  No Subordinated Lender shall otherwise take any actions prejudicial to
          or inconsistent with the Senior Lenders' priority position over the
          Subordinated Lenders with respect to any Subordinated Obligations.

3.   No Subordinated Lender shall commence or join with any other creditor or
     creditors of the Borrower in commencing any bankruptcy, reorganization or


                                        1

     insolvency proceedings against the Borrower. At any general meeting of
     creditors of the Borrower or in the event of any proceeding, voluntary or
     involuntary, for the distribution, division or application of all or part
     of the assets of the Borrower or the proceeds thereof, whether such
     proceeding be for the liquidation, dissolution or winding up of the
     Borrower or its business, a receivership, insolvency or bankruptcy
     proceeding, an assignment for the benefit of creditors or proceeding by or
     against the Borrower for position or extension or otherwise, if all Senior
     Loan Obligations have not been paid and satisfied in full at the time, the
     Administrative Agent is hereby irrevocably authorized at any such meeting
     or in any such proceeding:

     (a)  To enforce claims comprising the Subordinated Obligations in the name
          of the respective Subordinated Lenders, by proof of debt, proof of
          claim, suit or otherwise;

     (b)  To collect any assets of the Borrower distributed, divided or applied
          by way of dividend or payment, or such securities issued, on account
          of the Subordinated Obligations and apply the same, or the proceeds of
          any realization upon the same that the Administrative Agent in its
          discretion elects to effect, to the Senior Loan Obligations (whether
          or not due) until all the Senior Loan Obligations (whether or not due)
          shall have been paid and satisfied in full (the Administrative Agent
          hereby agreeing to render any surplus to the Subordinated Lenders)
          before any Subordinated Lender shall be entitled to receive any
          payment on account of the Subordinated Obligations;

     (c)  To vote claims comprising the Subordinated Obligations in order to
          accept or reject any plan of partial or complete liquidation,
          reorganization, arrangement, composition or extension; and

     (d)  To take generally any action in connection with any such meeting or
          proceeding to assert, defend or support the position of the
          Subordinated Lenders.

     After the commencement of any such bankruptcy, reorganization or insolvency
     proceeding, each Subordinated Lender may inquire of the Administrative
     Agent in writing whether the Administrative Agent intends to exercise the
     foregoing rights with respect to the Subordinated Obligations. In the event
     that the Administrative Agent fails within a reasonable time after receipt
     of such inquiry (but, in any event, no later than thirty (30) days after
     receipt of such inquiry) either to file a proof of claim with respect to
     the Subordinated Obligations and to furnish a copy thereof to such
     Subordinated Lender, or to inform such Subordinated Lender in writing that
     the Administrative Agent intends to exercise its rights to assert the
     Subordinated Obligations in the manner hereinabove


                                       2

     provided, such Subordinated Lender may, but shall not be required to,
     proceed to file a proof of claim with respect to its respective
     Subordinated Obligations and take such further steps with respect thereto,
     not inconsistent with the terms hereof, as such Subordinated Lender may
     deem proper. Neither the failure of the Administrative Agent to take any
     actions hereunder nor the exercise of the rights of any of the Subordinated
     Lenders to assert the Subordinated Obligations as hereinabove provided,
     affects or impairs the subordinated nature of any payment or collateral
     which may be received by the Subordinated Lenders.

     Subject to and from and after the payment and satisfaction in full of all
     Senior Loan Obligations, each Subordinated Lender shall be subrogated to
     the rights of the Senior Lenders to receive payments or distributions of
     cash, property or securities of the Borrower applicable to the Senior Loan
     Obligations until all amounts owing on the Subordinated Obligations shall
     be paid in full, it being understood that the provisions herein are
     intended solely for the purpose of defining the relative rights of the
     Subordinated Lenders and the Senior Lenders. Nothing contained herein is
     intended to or shall impair, as between the Borrower and its creditors
     other than the Senior Lenders and the Subordinated Lenders, the obligation
     of the Borrower, which is absolute and unconditional, to pay to the
     Subordinated Lenders the principal of and the premium, if any, and the
     interest on the Subordinated Obligations as and when the same shall become
     due and payable in accordance with its terms, or to affect the relative
     rights of the Subordinated Lenders and creditors of the Borrower other than
     the Senior Lenders.

4.   In the event that any payment on account of, or transfer of any collateral
     as security for any part of, the Subordinated Obligations is received by
     any Subordinated Lender in violation of the terms herein, such payment or
     collateral shall be held in trust for the benefit of the Senior Lenders and
     immediately be paid over or transferred, in the exact form received (except
     for the endorsement or assignment by such Subordinated Lender where
     necessary), to either the Trustee for application pursuant to the Master
     Security Agreement to the payment of all outstanding Senior Loan
     Obligations or the Offshore Collateral Agent as collateral for the Senior
     Loan Obligations. In the event of failure of any such Subordinated Lender
     to make any such endorsement or assignment, the Trustee and the Offshore
     Collateral Agent, as the case may be, are irrevocably authorized to make
     the same.

5.   Each Subordinated Lender agrees that any note, bond or other instrument
     held by it evidencing Subordinated Loans shall bear a prominent legend
     specifying that payment of principal of, interest on or other amount in
     respect of such note, bond or other instrument is subordinated to the
     Senior Loan Obligations on the terms and conditions set forth herein.


                                       3

6.   So long as any Senior Debt Obligation remains outstanding, neither the
     Subordinated Lenders nor the Borrower will: (i) convert or exchange any of
     the Subordinated Obligations into or for any other indebtedness or equity
     interest or (ii) sell, assign, pledge, encumber or otherwise dispose of any
     of the Subordinated Obligations unless such sale, assignment, pledge,
     encumbrance or disposition is effected in accordance with the provisions of
     the Financing Documents. The Subordinated Lenders and the Borrower agree
     that they will not permit the terms of any Subordinated Obligations to be
     changed without the prior written consent of the Administrative Agent, such
     consent not to be unreasonably withheld or delayed.

7.   The terms of subordination set forth herein shall continue to be effective
     or be reinstated, as the case may be, if, at any time, any payment by the
     Borrower of any of the Senior Loan Obligations is rescinded or must
     otherwise be returned by any of the Senior Lenders or the Administrative
     Agent upon the bankruptcy, reorganization or insolvency of the Borrower or
     otherwise, all as though such payment had not been made.

8.   Each Subordinated Lender may at any time and from time to time, either
     before or after the maturity thereof, without notice to or further consent
     of the Administrative Agent, extend the time of payment of, exchange or
     surrender or fail to act hereunder, or renew any of the Subordinated
     Obligations owed to it, and may also make any agreement with the Borrower,
     for the extension, renewal, payment, compromise, discharge or release
     thereof, in whole or in part, or for any modification of the terms thereof,
     without in any way impairing or affecting its obligations vis-a-vis the
     Senior Lenders pursuant hereto.

9.   The Borrower may agree at any time and from time to time to extend, renew
     or otherwise change the terms of the Senior Loan Obligations without
     impairing or affecting the rights of the Senior Lenders hereunder.

10.  This Agreement shall be governed by and construed in accordance with the
     laws of the State of New York.


                                        4

                                                                       EXHIBIT B

                 FORM OF PLEDGE AGREEMENT FOR SUBORDINATED LOAN

          This PLEDGE AGREEMENT (this "Agreement"), dated as of [__________], is
made by and between [NAME OF PARENT COMPANY/COMPANIES], a [___________________]
(the "Subordinated Lender"), and Citibank N.A., in its capacity as Offshore
Collateral Agent under the Master Security Agreement (the "Secured Party") for
the Senior Lenders. Each capitalized term used herein without definition shall
have the meaning set forth in, and shall be construed and interpreted in
accordance with, Schedule Z to the Master Security Agreement dated as of
September 30, 2005 among Sociedad Minera Cerro Verde S.A.A., Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Citibank, N.A., and
Citibank del Peru (as amended from time to time, the "Master Security Agreement"
or "MSA").

          A. The Borrower has entered into the Master Security Agreement (as
amended, modified and supplemented and in effect from time to time the "Master
Security Agreement"), by and among the Borrower, the Secured Party, the Senior
Lenders and various other appointed parties.

          B. The Subordinated Lender and the Borrower have entered into
[SUBORDINATED LOAN OR OTHER AGREEMENT] (as amended, modified and supplemented
from time to time, the "Subordinated Loan Agreement").

          C. The Financing Documents permit the Borrower to enter into the
Subordinated Loan Agreement and incur the loan obligations resulting therefrom
provided that the Subordinated Lender shall pledge for the benefit of the Senior
Lenders to the extent and in the manner hereinafter set forth, all of the
indebtedness and other obligations of the Borrower to the Subordinated Lender
under the Subordinated Loan Agreement.

          NOW THEREFORE, in consideration of the foregoing premises and as an
inducement to the Senior Lenders to grant financial accommodations to the
Borrower and in consideration of the granting thereof, the receipt and adequacy
of which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

1.   As collateral security for the prompt payment in full when due (whether at
     stated maturity, by acceleration or otherwise) of the Senior Loan
     Obligations and the Borrower's other obligations under the Senior Loan
     Documents, now existing or hereafter arising, to the extent permitted by
     applicable law, the Subordinated Lender hereby grants, transfers and
     assigns to the Secured Party a security interest in all of its right, title
     and interest in and to the Subordinated Loan Agreements and any promissory
     notes issued pursuant thereto (the "Collateral") including, without
     limitation (a) all of its rights to receive moneys due and to become due
     under or pursuant to any Subordinated Loan Agreement or any promissory
     notes issued pursuant thereto, (b) all of its rights to


                                       1

     receive proceeds of any insurance, payment and/or performance bond,
     indemnity, warranty or - guarantee with respect to any Subordinated Loan
     Agreement or any promissory notes issued pursuant thereto, (c) all of its -
     claims for damages arising out of or for breach of or default under any
     Subordinated Loan Agreement or any promissory notes issued pursuant thereto
     and (d) all of its rights to terminate, amend, supplement, modify or waive
     performance under any - Subordinated Loan Agreement or any promissory notes
     issued pursuant thereto, to perform thereunder and to compel performance
     and otherwise to exercise all remedies thereunder (it being understood
     that, as set forth in Section 3.10(a) of the Master Security Agreement, the
     Secured Party shall not be entitled to exercise such rights granted herein
     until the Senior Lenders have directed the Administrative Agent to
     authorize the Secured Party to take Borrower Enforcement Action with
     respect to the Collateral).

2.   The Subordinated Lender represents and warrants to the Secured Party that:

     (a)  The Subordinated Lender is a corporation duly organized, validly
          existing and is in good standing under the laws of the jurisdiction of
          its incorporation.

     (b)  The Subordinated Lender has full power and authority to enter into
          this Agreement, and to grant to the Secured Party the security
          interests in the Collateral owned by it and to incur the other
          obligations provided for herein.

     (c)  There is no provision of law, statute, regulation, rule, order,
          injunction, decree, writ or judgment, no provision of the
          organizational deeds of such Subordinated Lender and no provision of
          any mortgage, indenture, contract or agreement binding on such
          Subordinated Lender or affecting its properties, that would prohibit
          or conflict with the execution, delivery, or carrying out of the terms
          of this Agreement or the security interests granted hereunder.

     (d)  The Subordinated Lender is the legal and beneficial owner of the
          Subordinated Obligations, free and clear of any Lien, claim, option or
          right of others, except for the security interest created under this
          Agreement.

     (e)  The Subordinated Obligations are evidenced by one or more promissory
          notes and are not in default. All filings and other actions necessary
          to perfect the security interest in the Subordinated Obligations
          created under this Agreement, including the delivery of the promissory
          notes to the Secured Party, have been duly made or taken and are in
          full force and effect. This Agreement creates in favour of the Secured
          Party for the benefit of the Senior Lenders a valid and, together with
          such filings and other actions, perfected first priority security
          interest in the Subordinated Obligations, securing the payment of the
          Senior Loan Obligations.

3.   The Subordinated Lender agrees that, except as permitted pursuant to the
     Transfer Restrictions Agreement, it will not (a) sell, assign, convey,
     transfer or otherwise dispose of, or grant any option with respect to, any
     of the Collateral to any Person, or (b) create or suffer to exist any Lien
     upon or with respect to any of the Subordinated Obligations except for the
     pledge, assignment and security interest created under this Agreement.


                                       2

4.   The parties hereto agree that in accordance with the terms of Section
     3.10(a) of the MSA, notwithstanding the security interest created hereby in
     the Subordinated Loans and the promissory notes issued pursuant thereto,
     until the Senior Lenders have directed the Administrative Agent to
     authorize the Offshore Collateral Agent to take a Borrower Enforcement
     Action, the Subordinated Lender shall retain and be entitled to exercise
     all of its rights in the Subordinated Loans, including, without limitation,
     the right to receive payments of principal and interest on any Subordinated
     Loan Agreements and promissory notes issued pursuant thereto, when payable
     thereunder.

5.   The Secured Party agrees that in the event of (a) a sale, assignment or any
     other disposal of any or all of the Collateral as permitted pursuant to the
     Transfer Restrictions Agreement or (b) the repayment in full by the
     Borrower of an amount evidenced by a promissory note in accordance with the
     terms thereof, the Secured Party shall, upon written instruction by the
     Subordinated Lender, promptly return the promissory note(s) relating to the
     Collateral sold, assigned or disposed of pursuant to clause (a) or relating
     to the amount repaid pursuant to clause (b), to the Subordinated Lender.

6.   The Secured Party, or any officer or agent thereof, with full power of
     substitution for the Secured Party, as the case may be, is hereby appointed
     the attorney-in-fact of the Subordinated Lender for the purpose of carrying
     out the provisions of this Agreement and taking any action and executing
     any instruments which the Secured Party may deem necessary or advisable to
     accomplish the purposes hereof to the extent it is authorized or directed
     to take such action or execute such instrument pursuant to the terms
     hereof, which appointment as attorney-in-fact is coupled with an interest
     and is irrevocable and, without limiting the generality of the foregoing,
     which appointment hereby gives the Secured Party the power and right on
     behalf of the Subordinated Lender, without notice to or assent by any of
     the foregoing, to the extent permitted by applicable law, to do the
     following when and to the extent it is authorized or directed to do so
     pursuant to the terms of this Agreement or the Master Security Agreement:

     (a)  to ask for, demand, sue for, collect, receive and give acquittance for
          any and all moneys due or to become due with respect to the
          Collateral;

     (b)  to receive, take, endorse, assign and deliver any and all checks,
          notes, drafts, acceptances, documents and other negotiable and
          non-negotiable instruments, documents and chattel paper taken or
          received by the Secured Party in connection with this Agreement;

     (c)  to commence, file, prosecute, defend, settle, compromise or adjust any
          claim, suit, action or proceeding with respect to the Collateral;

     (d)  to sell, transfer, assign or otherwise deal in or with the Collateral
          or any part thereof pursuant to the terms and conditions of this
          Agreement; and

     (e)  to do, at its option and at the expense and for the account of the
          Subordinated Lender at any time or from time to time, all acts and
          things which the Secured


                                       3

          Party deems necessary to protect or preserve the Collateral and to
          realize upon the Collateral;

     provided, that (i) the Secured Party shall not exercise any of its rights
     under this power of attorney prior to a Borrower Enforcement Direction and
     (ii) prior to exercising such rights, the Secured Party shall notify the
     Subordinated Lender of its receipt of such Borrower Enforcement Direction
     and the contents thereof.

7.   If the Administrative Agent has authorized the Secured Party to take
     Borrower Enforcement Action with respect to the Subordinated Obligations:

     (a)  The Secured Party may exercise in respect of the Subordinated
          Obligations, in addition to other rights and remedies provided for
          herein and in the Master Security Agreement or otherwise available to
          it, all the rights and remedies of a secured party upon default under
          the UCC (whether or not the UCC applies to the affected Subordinated
          Obligations).

     (b)  The Secured Party shall receive all cash proceeds in respect of any
          payment of principal and interest or other realization of all or any
          part of the Subordinated Obligations, in accordance with its terms,
          which shall be applied in accordance with the Master Security
          Agreement.

8.   This Agreement may be executed in any number of counterparts, each of which
     shall be deemed to be an original and shall be binding upon all parties
     hereto, and their successors and assigns.

9.   THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
     LAWS OF THE STATE OF NEW YORK.

10.  If any provision of this Agreement shall be invalid, illegal or
     unenforceable, the parties hereto agree to the fullest extent they may
     effectively do so that the validity, legality and enforceability of the
     remaining provisions shall not in any way be affected or impaired thereby
     and the invalidity of a particular provision in a particular jurisdiction
     shall not invalidate such provision in any other jurisdiction.

11.  This Agreement and the security interests and rights created by and
     pursuant to this Agreement shall terminate upon (a) the payment and
     satisfaction in full of all the Senior Loan Obligations or (b) the sale or
     assignment of the entire Collateral in accordance with Section 5(a), and
     the Secured Party shall, at the expense of the Subordinated Lender, execute
     and deliver a termination statement and such instruments of satisfaction,
     discharge and release of security, including the release of the promissory
     notes to the Subordinated Lender, as may be requested by the Subordinated
     Lender and shall (i) in the case of clause (a) above, pay, assign, transfer
     and deliver to or to the order of the Subordinated Lender all moneys and
     other property held by the Secured Party hereunder after payment in full of
     all Senior Loan Obligations, or (ii) in the case of clause (b) above, shall
     pay, assign, transfer and deliver to or to the order of the Subordinated
     Lender all moneys and other property held by the Secured Party hereunder
     after such sale or assignment of the entire Collateral in accordance with
     Section 5(a).


                                        4

12.  This Agreement shall continue to be effective or be reinstated, as the case
     may be, if, at any time, any payment of any of the Senior Loan Obligations
     is rescinded or must otherwise be returned by any of the Senior Lenders or
     the Administrative Agent upon the bankruptcy, reorganization or insolvency
     of the Borrower or otherwise, all as though such payment had not been made.

13.  This Agreement constitutes the entire agreement and understanding, and
     supersedes all prior agreements and understandings (both written and oral),
     between the Subordinated Lender and the Secured Party with respect to the
     pledge of the Collateral and there are no warranties, representations or
     other agreements between the parties in connection with the subject matter
     hereof except as specifically set forth herein.

14.  The terms of this Agreement may be waived, altered or supplemented only by
     an instrument in writing duly executed by the parties hereto.

15.  This Agreement is for the benefit of the Secured Party, acting on behalf of
     the Senior Lenders, and not for the benefit of any other Person. This
     Agreement shall be binding upon the Subordinated Lender and its successors
     and assigns and shall inure to the benefit of the successors and assigns of
     the Secured Party.

16.  Any notice, request, demand, consent, designation, direction, instruction,
     certificate, report or other communication to be given hereunder shall be
     given in the English language and will be duly given when delivered in
     writing or facsimile transmission (with written confirmation of receipt,
     which confirmation may be by facsimile transmission) to a party at its
     address and facsimile transmission numbers as indicated below or to such
     other address as may be furnished for this purpose by such party (any such
     communication that is not in writing shall be confirmed in writing),
     provided that any notice, request, demand, consent, designation, direction,
     instruction, certificate, report or other communication sent to the Secured
     Party shall be deemed effective upon actual receipt thereof:

          If to the Subordinated Lender, at:

          [Contact information of the Subordinated Lender]

          If to the Secured Party, at:

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013
          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530


                                       5

17.

     (a)  The Subordinated Lender hereby irrevocably consents and agrees, for
          the benefit of the Secured Party hereto, that any legal action, suit
          or proceeding against it with respect to its obligations, liabilities
          or any other matter under or arising out of or in connection with this
          Agreement may be brought in any Federal or State court located in New
          York County in the City of New York and hereby irrevocably accepts and
          submits to the non-exclusive jurisdiction of such court with respect
          to any such action, suit or proceeding. Each party hereto hereby
          waives any objection which it may now or hereafter have to the laying
          of venue of any of the aforesaid actions, suits or proceedings brought
          in any such court and hereby further waives and agrees not to plead or
          claim in any such court that any such action, suit or proceeding
          brought therein has been brought in an inconvenient forum.

     (b)  The Subordinated Lender hereby irrevocably appoints CT Corporation in
          New York, NY, as its authorized agent on which any and all legal
          process may be served in any such action, suit or proceeding brought
          in any Federal or State court located in New York County in the City
          of New York. The Subordinated Lender agrees that service of process in
          respect of it upon such agent, together with written notice of such
          service given to it in the manner provided in Section 16 hereof, shall
          be deemed to be effective service of process upon it in any such
          action, suit or proceeding. The Subordinated Lender agrees that the
          failure of such agent to give notice to it of any such service shall
          not impair or affect the validity of such service or any judgment
          rendered in any action, suit or proceeding based thereon. If for any
          reason such agent shall cease to be available to act as such, the
          Subordinated Lender agrees to designate a new agent in New York County
          in the City of New York, on the terms and for the purposes of this
          Section 17. Nothing herein shall be deemed to limit the ability of the
          Secured Party or any Senior Facility Lender to serve any such legal
          process in any other manner permitted by applicable law or to obtain
          jurisdiction over the Subordinated Lender or bring actions, suits or
          proceedings against them in such other jurisdictions, and in such
          manner, as may be permitted by applicable law.

18.  Each party hereby waives, to the fullest extent permitted by applicable
     law, any and all right to trial by jury in any legal proceeding arising out
     of or relating to this Agreement or the transactions contemplated hereby.

19.  To the extent that any party has or hereafter may acquire any immunity
     (sovereign or otherwise), from any legal action, suit or proceedings, from
     jurisdiction of any court or from set-off or any legal process (whether
     service or notice, attachment prior to judgment, attachment in aid of
     execution of judgment, execution of judgment or otherwise) with respect to
     itself or any of its property, such party hereby irrevocably waives and
     agrees not to plead or claim such immunity in respect of its obligations
     under this Agreement or the subject matter hereof (including, without
     limitation, any obligation for the payment of money). The parties hereby
     agree that the waivers set forth in this Section 19 shall have the fullest
     effect permitted under the Foreign Sovereign Immunities


                                       6

     Act of 1976 of the United States, as amended, and are intended to be
     irrevocable and not subject to withdrawal for purposes of such Act. The
     foregoing waiver shall constitute a present waiver of immunity at any time
     that any action is initiated against such party with respect to this
     Agreement.

20.  The Subordinated Lender agrees to pay or reimburse the Secured Party,
     without duplication, for all of its reasonable costs and expenses incurred
     in connection with this Agreement.

21.  The parties agree to do such further acts and things and to execute and
     deliver such additional agreements and instruments as may be reasonably
     necessary to give effect to the purpose of this Agreement and the parties'
     agreement hereunder.

                             [SIGNATURES TO FOLLOW]


                                       7

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

                                        [SUBORDINATED LENDER],


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        CITIBANK N.A., as Secured Party


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                                                    Appendix A-1
                                                         to Completion Guarantee

                FORM OF PRODUCTION CERTIFICATE - FULL COMPLETION

          I, [NAME OF SENIOR OFFICER], [title of Senior Officer] of the
     Borrower, hereby certify that:

     (a) Attached to this certificate as Annex B are copies of operating
records, bills of lading and other data and documentation relating to production
by the Sulfide Project during the periods referred to in clause (e) below. Such
documentation accurately reflects, in all material respects, the production of
the Sulfide Project during the period to which it relates, and evidences
compliance with the certifications set forth in sections (i) through (vi) of
clause (g) below.

     (b) All sampling procedures relevant to the matters covered by this
certificate were conducted by the Borrower in accordance with standard
international mining practices; all assaying was conducted by the Borrower in
accordance with standard international mining practices. The sampling locations
and laboratory assay procedures have been verified by the Independent Engineer.

     (c) The Independent Engineer was provided with the Borrower's most recently
approved Three Year Budget Plan (the "Reference Budget Plan") that covers the
Completion Test Period, together with (i) the current block model and mine plan
(together, the "Current Mine Plan") related to the Reference Budget Plan and
(ii) the past 12 months' operating reports for the Borrower. The Reference
Budget Plan and the Current Mine Plan are in all material respects consistent
with, and contemplate life-of-loan operating and production results not
materially divergent from those projected in, the Primary Sulfide Mine Plan and
Project Financial Model (together, the "2005 Plan") on which the April 7, 2005
Information Memorandum delivered to the Senior Facility Lenders was based
(except for such material changes thereto, if any, as have been previously
furnished to the Senior Facility Lenders, reported on by the Independent
Engineer, and approved by the Majority Facility Lenders). [SELECT ONE: "The
foregoing certification can be made" OR "The foregoing certification cannot be
made. Accordingly, all subsequent references in this Certificate to "Reference
Budget Plan" and "Current Mine Plan" shall mean the 2005 Plan."]

     (d) The Reference Budget Plan was provided to the Independent Engineer at
least 30 Business Days' prior to the start of the Completion Test Period. Notice
of the start of the Completion Test Period was given to the Independent Engineer
at least 15 days prior to the start of such period. The Current Mine Plan was
substantially adhered to during the Completion Test Period.

     (e) the "Completion Test Period" began on [start date] and ended on [date],
and comprised at least 45 Operating Days falling outside of the traditional
"wet" months of January, February and March.

     (f) For purposes of this certificate,

          (1)  "Completion Test Period" is defined as a period of 90 Operating
               Days in any 100-day continuous period.


          (2)  "Operating Day" is defined as any day other than a day on which
               (a) the operations of the Sulfide Project ceased for more than 12
               continuous hours due to force majeure or (b) work at the Sulfide
               Project was prohibited by applicable law or labor agreement.

          (3)  "force majeure" is defined as an act of God, labor dispute and
               industrial action of any kind (including, without limitation, a
               strike, interruption, slowdown and other similar action on the
               part of organized labor), a lockout, act of the public enemy, war
               (declared or undeclared), civil war, sabotage, blockade,
               revolution, riot, insurrection, civil disturbance, terrorism,
               epidemic, cyclone, tidal wave, landslide, lightning, earthquake,
               flood, storm, fire, adverse weather conditions, expropriation,
               nationalization, act of eminent domain, laws, rules, regulations
               or orders of governmental authority, acts of other private and
               public companies, explosion, breakage or accident to machinery or
               equipment or pipe or transmission line or other facility not of a
               systemic nature, embargo, inability to obtain or delay in
               obtaining equipment, materials, transport, event of political
               force majeure or any event whether similar to the foregoing or
               not which is not within the reasonable control of the Borrower,
               and which has a material adverse effect on the ability of the
               Borrower to perform its obligations, including, without
               limitation, such event which has a material adverse effect on the
               ability of the Borrower to mine, produce or ship copper
               concentrate.

     (g) COMPLETION TEST.

          During the Completion Test Period, the Borrower achieved the following
     results of operations at the Sulfide Project:

          (1) MINE TEST:

               -    Total mined tonnage (including to and from the ore
                    stockpiles) during the Completion Test Period was at least
                    90% of the planned tonnage for such period as forecast in
                    the Current Mine Plan.


                                      A-1-2

          (2)  MILL TEST:

               -    The Borrower milled ore (a) during the Completion Test
                    Period at an average rate of at least 90% of 108,000 tonnes
                    per day and (b) during 15 continuous Operating Days within
                    the Completion Test Period at an average rate of at least
                    108,000 tonnes per day.

               -    The Borrower produced copper in concentrate during the
                    Completion Test Period totaling at least 90% of planned
                    tonnes of copper in concentrate as forecast in the Reference
                    Budget Plan for such period.

               -    Copper concentrates produced during the Completion Test
                    Period had an average copper grade at least equal to 90% of
                    planned concentrate grade as forecast in the Reference
                    Budget Plan for such period.

               -    Contained molybdenum recovered in molybdenum concentrate
                    produced during the Completion Test Period was at least 50%
                    of the planned recoverable molybdenum forecast in the
                    Reference Budget Plan for such period.

               -    If the copper head grade during the Completion Test Period
                    was more than 120% of the grade contemplated in the
                    Reference Budget Plan for such period, then mill copper
                    recovery was at least 90% of the recovery forecast in the
                    Reference Budget Plan for such period (with Recovery = 100 x
                    (C/H) x (H-T)/(C-T), where H, T, C are head, tail and
                    concentrate % Cu).

          (3)  INFRASTRUCTURE TEST:

               -    Fresh Water Make-Up. The fresh water pumping system is
                    capable of pumping at a rate at least 100% of required
                    make-up water defined in the water balance calculation based
                    on the Borrower's actual operations, and has pumped at a
                    rate at least 90% of design capacity for at least one hour,
                    and such capability and performance are demonstrated in the
                    results (furnished to the Independent Engineer) of the
                    mechanical completion test performed by Fluor and accepted
                    by the Borrower under the Construction Agreements.

               -    Electrical Supply System. The new installed electrical
                    supply system (substation, power line and power distribution
                    system) has installed capacity to meet at least 90% of the
                    design power


                                      A-1-3

                    requirements specified in the Fluor scope of work under the
                    Construction Agreements which may be modified from time to
                    time and which shall include the design power requirements
                    specified in the Feasibility Study, and such capacity is
                    demonstrated in the results (furnished to the Independent
                    Engineer) of the mechanical completion test performed by
                    Fluor, and accepted by the Borrower under the Construction
                    Agreements. During the Completion Test Period, 100% of the
                    required power demand for the operation of the Primary
                    Sulfide facilities was provided from the national power grid
                    system.

          (4)  TAILING STORAGE:

               -    Viewed at the end of the Completion Test Period, the tailing
                    production and hydro-cyclones system produced sufficient
                    quantity and quality of sand material (at normal particle
                    size) to allow the dam embankment construction to contain
                    the total volume of tailings produced to the end of the
                    Completion Test Period (including the specified safety
                    margin of freeboard as specified in the design parameters
                    set forth in Feasibility Study, as may be modified by the
                    independent review board); and the to-date history of dam
                    construction, at the beginning and at the end of the
                    Completion Test Period, has been provided to the Independent
                    Engineer to demonstrate the foregoing.

          (5)  SHIPPING AND QUALITY TESTS:

               -    90% of the copper concentrate tonnage produced during the
                    Completion Test Period has been loaded onto ships for
                    shipment (or alternatively loaded onto trucks for transport)
                    to a processor during the 120-day period that includes the
                    Completion Test Period.

               -    For all copper concentrate shipments for which settlement
                    was made during the three-month period ending at the
                    commencement of the Completion Test Period, total penalties
                    (price reductions) assessable under applicable Sales
                    Contracts did not exceed 5% of total sales price of such
                    copper concentrate.


                                      A-1-4

          (6)  EFFICIENCY TEST:

               -    The aggregate efficiency measure [(described in clause
                    (c)(III) of the Efficiency Test description)] during the
                    Completion Test Period did not exceed 112.5%.

This is the certificate referred to in paragraph (a) of Section 2.01 of the
Completion Guarantee, dated as of September 30, 2005, among the Parent
Companies, the Administrative Agent and the Senior Facility Lenders, as the same
may be amended from time to time (the "Completion Guarantee"). Capitalized terms
used herein, except as otherwise defined herein, shall have the meanings
assigned to them in the Completion Guarantee or, if not defined therein,
Schedule Z to the Master Security Agreement, dated as of September 30, 2005,
among the Borrower, the Senior Lenders, the Lead JBIC Arrangers, the Global
Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee, the
Offshore Collateral Agent and the Collateral Agent, as the same may be amended
from time to time (the "Master Security Agreement").

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER], on behalf of the Borrower
have caused this certificate to be duly executed.

Dated:
       -------------

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      A-1-5

                                   Annex A to

                             Production Certificate

     [Name of Independent Engineer] a _______________ organized under the laws
of _____________ have performed such inspections, observations, analyses and
other procedures which we have, in our reasonable judgment, deemed necessary for
purposes of this certificate. Such procedures, and the names of our employees or
agents who performed them, are described in Annex C to the Production
Certificate.

     Based on such procedures, we hereby certify that (1) we have no reason to
believe that any of the certifications of the Borrower set forth hereinabove is
not true and correct in all material respects as of the date hereof, and (2) we
concur with the statement made in the second sentence of paragraph (c) of the
foregoing certificate.

     IN WITNESS WHEREOF, [Name of senior officer of Independent Engineer] has
caused this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF INDEPENDENT ENGINEER]


                                        By:
                                            ------------------------------------
                                        [Name]
                                               ---------------------------------
                                        [Position]
                                                   -----------------------------


                                      A-1-6

                                   Annex B to
                             Production Certificate

[Attach copies of operating records, bills of lading and other data and
documentation relating to Sulfide Project production and operations during
relevant period, including data demonstrating compliance with the certifications
set forth in the Production Certificate.]


                                      A-1-7

                                   Annex C to
                             Production Certificate

                 DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

                      [To be completed at time of delivery]


                                      A-1-8

                                                                    Appendix A-2
                                                         to Completion Guarantee

                FORM OF EFFICIENCY CERTIFICATE - FULL COMPLETION

          I, [NAME OF SENIOR OFFICER], [title of Senior Officer] of the
Borrower, hereby certify that:

     (a) Attached to this certificate as Annex B are copies of operating records
and other data and documentation relating to production by and operation of the
Sulfide Project during the Completion Test Period referred to in clause (b)
below. Such documentation accurately reflects, in all material respects, the
production and operation of the Sulfide Project during the period to which it
relates, and evidences compliance with the certification set forth in clause
(c)(III) below.

     (b) (i) For purposes of this Certificate, the "Completion Test Period" is
the same as the Completion Test Period referred to in the Production Certificate
dated the date hereof provided by the Borrower to the Senior Facility Lenders
(the "Production Certificate").

          (ii) The forecast usage, forecast consumption and forecast
     productivity figures set forth in each test below, identified in bold
     typeface, are based on the 2005 Plan. If the Reference Budget Plan used for
     the Production Certificate is different from the 2005 Plan but has been
     approved or certified (by the Borrower and Independent Engineer) as
     contemplated in clause (c) and Annex A of the Production Certificate, then
     such forecast figures will be adjusted to reflect the differences, provided
     the Independent Engineer concurs with such adjustments.

          (iii) If the actual average mine truck haulage distance during the
     Completion Test Period varies from the forecast average distance by more
     than 10%, then, the forecast usage, forecast consumption and forecast
     productivity figures set forth in each of clauses (A), (C), (D) and (E) of
     the mine test in clause (c)(I) below, identified in bold typeface, will be
     adjusted by that percentage difference.

     (c) EFFICIENCY TESTS

               (I)  MINE. The relevant percentages to be computed (based on
                    actual performance during the Completion Test Period) and
                    relative weightings are the following:

                    (A)  FUEL:
                         Percentage: Average mining fleet diesel consumption per
                         operating hour during the Completion Test Period, in
                         gallons per operating truck hour, as a percentage of
                         the forecast consumption of 41.4 U.S. GAL./hr.
                         Weighting: 10.0%

                    (B)  LOADING:
                         Percentage: Shovel operating hours to total tonnes of
                         material loaded on mine trucks during the Completion
                         Test Period as measured by the mine dispatch system, in
                         mine operating hours to dry metric tonnes, as a
                         percentage of the forecast ratio of 1 hr per 4,329 DMT.
                         Weighting: 6.0%

                    (C)  HAULAGE:
                         Percentage: Truck operating hours to total tonnes of
                         material hauled from the mine and the ore stockpiles,
                         during the Completion Test Period as measured by the
                         mine dispatch system, in mine operating hours to dry
                         metric tonnes, as a percentage of the forecast ratio of
                         1 hr per 548 DMT.
                         Weighting: 12.0%

                    (D)  LABOR:
                         Percentage: Total mine workforce operating hours to
                         tonnes of material (including ore stockpiles) moved
                         during the Completion Test Period, in mine workforce
                         operating hours to dry metric tonnes, as a percentage
                         of the forecast productivity ratio of 1 hr per 99.5
                         DMT.
                         Weighting: 8.0%

                    (E)  TIRES:
                         Percentage: Average mileage-life per mine truck tire
                         (before replacement), in total tires used to total
                         miles of mine truck haulage over the twelve-months
                         period ending at the end of the Completion Test Period,
                         as a percentage of the forecast rate of 1 tire per
                         64,000MI, provided that the Independent Engineer may
                         agree to a substantially equivalent test.
                         Weighting: 4.0%

               (II) MILL. The relevant percentages to be computed (based on
                    actual performance during the Completion Test Period) and
                    relative weightings are the following:

                    (A)  POWER:
                         Percentage: Average electricity consumption per tonne
                         of ore milled (including, concentrator, water supply
                         and water return) during the Completion Test Period, in
                         kilowatt hours per dry metric tonne of ore milled, as a
                         percentage of the forecast rate of 22 KWH/dmt.
                         Weighting: 33.0%

                    (B)  LABOR:
                         Percentage: Average daily total mill workforce to total
                         tonnes of ore milled during the Completion Test Period,
                         in size of workforce to dry metric tonnes of ore
                         milled, as a percentage of the forecast productivity
                         ratio of 1 worker per 341DMT.
                         Weighting: 12.0%

                    (C)  WATER:
                         Percentage: Average liters of fresh water utilized per
                         tonne of ore milled during the Completion Test Period,
                         in liters per dry metric tonne of ore milled, as a
                         percentage of the forecast usage rate of 516 l/dmt.
                         Weighting: 6.0%


                                      A-2-2

                    (D)  LIME:
                         Percentage: Average kilograms of lime utilized per
                         tonne of ore milled during the Completion Test Period,
                         in kilograms per dry metric tonne of ore milled, as a
                         percentage of the forecast usage rate of 1.1 KG/dmt.
                         Weighting: 6.0%

                    (E)  FLOCCULANT:
                         Percentage: Average grams of flocculant utilized per
                         tonne of ore milled during the Completion Test Period,
                         in grams per dry metric tonne of ore milled, as a
                         percentage of the forecast usage rate of 14 G/dmt.
                         Weighting: 3.0%

               (III) COMPOSITE TEST. Based on the actual performance of the
                    Sulfide Project during the Completion Test Period, the
                    weighted average of the percentages computed under clauses
                    (A) through (E) of Section I and clauses (A) through (E) of
                    Section II above, combined, did not exceed 112.5%.

This is the certificate referred to in paragraph (b) of Section 2.01 of the
Completion Guarantee, dated as of September 30, 2005, among the Parent
Companies, the Administrative Agent and the Senior Facility Lenders, as the same
may be amended from time to time (the "Completion Guarantee"). Capitalized terms
used herein, except as otherwise defined herein, shall have the meanings
assigned to them in the Completion Guarantee or, if not defined therein,
Schedule Z to the Master Security Agreement, dated as of September 30, 2005,
among the Borrower, the Senior Lenders, the Lead JBIC Arrangers, the Global
Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee, the
Offshore Collateral Agent and the Collateral Agent, as the same may be amended
from time to time (the "Master Security Agreement").

          IN WITNESS WHEREOF, I, [Name of Senior Officer], on behalf of the
Borrower have caused this certificate to be duly executed.

Dated:
       -------------

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      A-2-3

                                   Annex A to

                             Efficiency Certificate

     [NAME OF INDEPENDENT ENGINEER] a _______________ organized under the laws
of _____________ have performed such inspections, observations, analyses and
other procedures which we have, in our reasonable judgment, deemed necessary for
purposes of this certificate. Such procedures, and the names of our employees or
agents who performed them, are described in Annex C to this certificate.

     Based on such procedures, we hereby certify that (1) we have no reason to
believe that any of the certifications of the Borrower set forth hereinabove is
not true and correct in all material respects as of the date hereof, and (2) we
concur with the adjustments (if any) made to original forecasted figures in
accordance with paragraph (ii) and paragraph (iii) of clause (b) of the
foregoing certificate.

     IN WITNESS WHEREOF, [NAME OF SENIOR OFFICER OF INDEPENDENT ENGINEER] has
caused this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF INDEPENDENT ENGINEER]


                                        By:
                                            ------------------------------------
                                        [Name]
                                               ---------------------------------
                                        [Position]
                                                   -----------------------------


                                      A-2-4

                                   Annex B to
                             Efficiency Certificate

[Attach copies of operating records and other data and documentation relating to
Sulfide Project production and operations during relevant period, including data
demonstrating compliance with the certifications set forth in the Efficiency
Certificate.]


                                      A-2-5

                                   Annex C to
                             Efficiency Certificate

                 DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

                      [To be completed at time of delivery]


                                      A-2-6

                                                                    Appendix A-3
                                                         To Completion Guarantee

                     FORM OF PHYSICAL FACILITIES CERTIFICATE

     I, [NAME OF SENIOR OFFICER], [title of Senior Officer] of the Borrower,
hereby certify on behalf of the Borrower that:

     (a) Notwithstanding anything else herein, any and all of the items of
equipment and facilities described in Annex A of this Appendix A-3, may be
substituted in the actual Physical Facilities Certificate with alternative items
of equipment and facilities having substantially equivalent or better mining and
processing capabilities than those of the listed item, subject to the written
concurrence of the Independent Engineer to be attached hereto.

     (b) (i) Between the dates of [_____] and [_____], [NAMES OF EMPLOYEES OR
AGENTS], [TITLES], inspected the equipment and physical facilities of the
Project. We have considered whether, in our reasonable judgment, the equipment
and physical facilities described in Annex A (the "Physical Facilities") have
been installed and have become operational, in each case at the time of such
inspection. Our work involved inspection of equipment and facilities and
operation thereof, only to the extent necessary to identify such equipment and
facilities and the attributes thereof, if any, referred to in Annex A and to
conclude whether such equipment and facilities have become operational. Such
inspections and observations were those we, in our reasonable judgment, deemed
necessary for the purposes of delivering this certificate.

          (ii) We have noted in the analysis attached hereto as Annex B a
description of the equipment which we identified as meeting the requirement of
each item listed in Annex A, together with a description thereof reasonably
sufficient for purposes of such identification. The equipment measures and
amounts stated in Annex B represent approximate figures and actual measures and
amounts may vary depending upon various factors, including actual
characteristics of available equipment. Where measures and amounts relating to
the actual equipment installed are approximately those set forth in Annex A, we
have deemed the installed equipment to be substantially the same as that
described in Annex A and have stated the relevant amount or measure in the
description included in Annex B.

          (iii) Based on and subject to the foregoing, as of the date hereof,
equipment and physical facilities of the Project substantially the same as the
Physical Facilities have been installed and have become operational.

     (c) As of the date hereof,


                                      A-3-1

          (i) the Borrower has delivered notification of its acceptance of
delivery of, and its acceptance of substantially all work performed in
connection with, each of the Physical Facilities for which such notification is
required under the contracts or sub-contracts for the delivery, construction or
installation of each such facility, to the relevant contractor or
sub-contractor, in accordance with the contracts or sub-contracts for the
delivery, construction or installation of each such facility (subject to the
exceptions or conditions, if any, contained in such notification of acceptance,
none of which shall have (individually or in the aggregate) a material adverse
effect on the operation of the Project substantially as contemplated in the
Primary Sulfide Mine Plan used by the Sponsors to prepare the Project Financial
Model used for the April 7, 2005 Information Memorandum (the "Primary Sulfide
Mine Plan") and the "Master Participation Agreement" and subject further to such
warranties and similar conditions as are set out in such contracts or
sub-contracts, except for any work the non-acceptance of which will not
(individually or in the aggregate) have a material adverse affect on the
operation of the Project,

          (ii) the Borrower has provided to the Independent Engineer each
certificate of system completion to be delivered by contractors and
sub-contractors in connection with the acceptance of work described herein,

          (iii) substantially all payments required as of the date hereof in
respect of such contracts and sub-contracts have been made and the Borrower has
available the funds necessary to make any remaining payments under such
contracts and sub-contracts (but solely as they relate to the Physical
Facilities described in Annex B) as and when they become due and,

          (iv) as of the date hereof,

               (x) the Physical Facilities have been paid for by the Borrower
          or,

               (y) as to those Physical Facilities which have not been so paid
          for, the Borrower has sufficient funds available to it to make such
          payments.

     (d) As of the date hereof, the items and quantities of capital spares
inventory set forth in Annex C hereto are either on hand at a facility of the
Project in Peru or the Borrower has entered into arrangements to procure such
items in the quantities set forth in such Annex C, and such arrangements shall
have been made pursuant to an established procurement system that will provide
spares and consumables in a sound and efficient manner such that such spares and
consumables can be expected to be on hand at the Project's facilities within 120
days (or, in the case of any items of such inventory which have been taken from
inventory and put into use subsequent to Start-up of Commercial Production, such
longer periods as are required by delivery schedules). As of the date


                                      A-3-2

hereof, the items and quantities of consumables set forth in Annex C are either
on hand at a facility of the Project in Peru or have been purchased by the
Borrower.

     (e) As of the date hereof, (1) the Physical Facilities includes the four
High Pressure Grinding Rolls (HPGR) and the four Ball Mills constructed and
installed at the Project and (2) the Borrower has delivered (or attached hereto)
a certificate of an authorized officer of the Borrower stating that the Borrower
has paid out the entire contract price.

     Our work for purposes of this certificate did not involve any appraisal of
the quality, actual performance characteristics or operating history or
prospects of the equipment and facilities and, accordingly, this certificate
should not be taken as a representation that such equipment or facilities are
free of defects, will perform at their design or nameplate capacities or will
otherwise function for the purposes for which they were designed or installed.

     This is the certificate referred to in paragraph (c) of Section 2.01 of the
Completion Guarantee, dated as of September 30, 2005, among the Parent
Companies, the Administrative Agent and the Senior Facility Lenders, as the same
may be amended from time to time (the "Completion Guarantee"). Capitalized terms
used herein, except as otherwise defined herein, shall have the meanings
assigned to them in the Completion Guarantee or, if not defined therein, the
meanings assigned to them in Schedule Z to the Master Security Agreement, dated
as of September 30, 2005, among the Borrower, the Senior Lenders, the Lead JBIC
Arrangers, the Global Coordinators, the Lead Arrangers, the Administrative
Agent, the Trustee, the Offshore Collateral Agent and the Collateral Agent, as
the same may be amended from time to time (the "Master Security Agreement").


                                      A-3-3

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER], on behalf of the Borrower
have caused this certificate to be duly executed.

Dated:
       -------------

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      A-3-4

     [NAME OF INDEPENDENT ENGINEER] a _______________ organized under the laws
of _____________ has performed such inspections, observations, analyses and
other procedures which we have, in our reasonable judgment, deemed necessary for
purposes of this certificate. Such procedures, and the names of our employees or
agents who performed them, are described in Annex D to this certificate. Based
on such procedures, we hereby certify that we have no reason to believe that
each of the certifications of the Borrower set forth hereinabove is not true and
correct in all material respects as of the date hereof.

     We concur with any changes to the Annex A as provided in clause (a) of the
Physical Facilities Certificate.

     In our opinion, the list of Capital Spares and Key Consumable Inventory
attached as Annex C is reasonable.

     IN WITNESS WHEREOF, [NAME OF SENIOR OFFICER OF INDEPENDENT ENGINEER] has
caused this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF INDEPENDENT ENGINEER]


                                        By:
                                            ------------------------------------
                                        [Name]
                                               ---------------------------------
                                        [Position]
                                                   -----------------------------


                                      A-3-5

                                                                         Annex A
                                              to Physical Facilities Certificate

                  EQUIPMENT AND PHYSICAL FACILITIES DESCRIPTION

Area 3100 Primary Crushing & Coarse Ore Handling

Area 3100 includes a 500 tonne truck dump box positioned directly above a
gyratory crusher. Crushed ore is reclaimed from a surge pocket beneath the
crusher by a variable-speed apron feeder which transfers ore onto coarse ore
transfer conveyor CV-001. The coarse ore stockpile feed conveyor CV-002 receives
primary crushed ore from CV-001 and discharges it onto the coarse ore stockpile.

The truck dump box, crusher support, surge pocket, apron feeder support, and
area for the tail section of the transfer conveyor are of concrete construction.
A structural steel service tower on the open side of the crusher station houses
the crusher hydraulic room and electrical room. A crusher cab is located at the
top of the service tower adjacent to the truck dump box.

Major equipment includes:

     -    Primary gyratory crusher - FFE 60 inch x 113 inch crusher with 746 kW
          drive motor

     -    Rock breaker - BTI hydraulically operated pedestal mounted breaker

     -    Jib crane - HMB 120t/20t pedestal mounted crane

     -    Apron feeder - FFE 2.7 m wide apron feeder / 320 kW hydraulic drive

     -    Coarse ore transfer conveyor - 1.8 m wide x approximately 100 m long/
          1 x 447 kW

     -    Coarse ore conveyor - 1.8 m wide x approximately 700 m long/ 3 x 1044
          kW

Area 3200 Secondary and Tertiary Crushing and Conveying

Area 3200 includes a reclaim tunnel and four feeders to reclaim primary crushed
ore to feed the secondary/tertiary crushing plant. The crushing plant is an open
structural steel building approximately 70 m x 74 m in footprint. The crushing
plant includes secondary screens and crushers, tertiary HPGR (high pressure
grinding roll) crushers, screens, feeders, conveyors and storage bins. Product
from the tertiary crushers discharges onto a conveyor system to the ball mills.

Major equipment includes:


                                      A-3-6

     -    Coarse ore reclaim feeders - 4# - FFE 1.8 m wide apron feeders / 150
          kW hydraulic drives

     -    Coarse ore reclaim conveyor - 2.1 m wide / 2 x 111 kW motors

     -    Coarse ore tripper conveyor - 2.1 m wide / 2 x 597 kW motors

     -    Coarse ore surge bins - 4 # sections 800 tonne capacity each - steel
          construction

     -    Coarse ore screens - 4# - Ludowici 3.5 x 8 m vibrating banana screens

     -    Secondary crushers - 4# - Metso MP1000 crushers / 750 kW drives

     -    Secondary crusher discharge conveyor - 1.8 m / 2 x 447 kW motors

     -    Secondary crusher product transfer conveyor - 2.1 m / 1 x 111 kW motor

     -    Coarse ore screen undersize conveyor - 1.8 m / 2 x 447 kW motors

     -    Coarse ore screen undersize transfer conveyor - 2.1 m / 1 x 111 kW
          motor

     -    HPGR surge bin feed conveyor - 2.1 m wide / 2 x 597 kW motors

     -    HPGR feed bins - 4# sections 1200 tonne capacity each - steel
          construction

     -    HPGR crusher feeders - 4# CEI 1.5 m wide belt feeders / 150 kW drives

     -    HPGR discharge conveyor - 2.1 m wide / 3 x 597 kW motors

     -    HPGR product conveyor - 2.1 m wide / 2 x 597 kW motors

     -    HPGR - 4# Polysius 2.4m x 1.7m 5000 kW


Area 3300 Grinding

Area 3300 includes ball mill feed surge bins from which ore is reclaimed by belt
feeders and transferred directly onto ball mill feed wet screens. Oversize
material from the screens is discharged onto a conveyor for recirculation to the
crushing HPGRs. Screen undersize is discharged directly to the ball mill cyclone
feed sumps. The four grinding lines each consist of dual screens, ball mill,
sump and cyclone feed pump, and a cyclone cluster. For each line, the ball mill
discharge and screen undersize product discharges to a single sump, from which
the single cyclone feed pump feeds to the cyclone cluster. The grinding circuit
facilities are installed within an open structure that supports service cranes
for the mills and cyclones.

Major equipment includes:

     -    Ball mill feed surge bins - 4# sections 5000 tonne capacity each -
          reinforced concrete construction

     -    Ball mill screen feeders - 4# CEI 2.1 m wide belt feeders / 261 kW
          drives

     -    Ball mill feed screens - 8# Ludowici 3 x 7.3 m double deck banana
          screens

     -    Ball mill screen oversize conveyor - 1.8 m wide / 1 x 597 kW motor


                                      A-3-7

     -    Ball mills - 4# Polysius 7.3 m diameter x 10.7 m long shell supported
          mills with 12MW wrap around motors

     -    Primary cyclone feed pumps - 4# Krebs Millmax 28" x 26" pumps / 1120
          kW motors

     -    Primary cyclones - 4# Krebs cyclone clusters with 8 - 840 mm cyclones

Area 3400 Copper Flotation

Area 3400 includes rougher-scavenger flotation, regrind milling, and cleaner
flotation. The rougher-scavenger flotation circuit consists of four rows of 10
agitated flotation cells. Concentrate from the rougher-scavenger flotation cells
is split into two streams and treated separately in the regrind circuits before
being combined in the final cleaner circuit.

Major equipment includes:

     -    Rougher flotation cells - 4 rows of 10 Dorr-Oliver Eimco 160 m3 cells
          with 185 kW mechanisms

     -    Rougher concentrate polishing mills - 2 # Metso SMD-355 polishing
          mills with 355 kW drives

     -    Regrind mills - 3# Metso VTM 1500 vertical tower mills with 1118 kW
          drives

     -    Column cells - 4# MinnovEX 5 m x 12 m column cells

     -    Cleaner/Scavenger flotation cells - 1 row of 4 cleaner and 6 scavenger
          Dorr-Oliver Eimco 160 m3 cells with 185 kW mechanisms

Area 3500 Molydenum Plant

The molybdenum circuit processes the copper-molybdenum (Cu-Mo) bulk concentrate.
The bulk concentrate is treated through rougher/scavenger flotation cells and
cleaner flotation cells to produce final molybdenum concentrate. The tailing
from the Mo circuit is the final Cu concentrate and is transferred to the Cu
concentrate thickener. The Mo plant is located in an open outdoor structure with
a roof extending over the filter/dryer area.

Major equipment includes:

     -    Cu-Mo Concentrate thickener - Delkor 30 m diameter high rate thickener

     -    Mo rougher flotation cells - 4# Dorr-Oliver Eimco 30 m3 flotation
          cells with 55 kW mechanisms

     -    Mo rougher/scavenger flotation cells - 2# Dorr-Oliver Eimco 30 m3
          covered flotation cells with 55 kW mechanisms


                                      A-3-8

     -    Mo 1st cleaner flotation cells - 7# 8.5 m3 Dorr-Oliver Eimco flotation
          cells with 22 kW mechanisms

     -    Mo cleaner scavenger flotation cells - 7# 4.2 m3 Dorr-Oliver Eimco
          flotation cells with 11 kW mechanisms

     -    Mo 1st cleaner concentrate thickener - Delkor 15 m diameter high rate
          thickener

     -    Mo cleaner column cells - 5# MinnovEX 1 m to 2.6 m diameter by 12 m
          column cells

     -    Mo concentrate filter - 1 # Larox 12.6 m2 filter

     -    Mo concentrate dryer - 1 # 19 m2 dryer

Area 3600 Concentrate Dewatering & Loadout

Mo scavenger flotation tailing is thickened in a 20 m diameter Cu concentrate
thickener and then transferred to 2 agitated storage tanks. The concentrate is
pumped from the tanks to one of two copper concentrate filters located in an
enclosed structure above a 3600 tonne capacity storage area. The concentrate is
transferred by a front-end loader onto a conveyor to load trucks for shipment
offsite.

Major equipment includes:

     -    Cu concentrate thickener - Delkor 20 m high rate thickener

     -    Cu concentrate storage tanks - 2# - 11 m dia. x 11 m high storage
          tanks with Lightnin 56 kW agitators

     -    Cu concentrate filters - 2# - Larox 144 m2 filters

Area 3700 Tailing Thickening

The tailing thickening circuit in the concentrator area consists of two 75 m
diameter high rate thickeners, thickener underflow pumps, thickener overflow
reclaim water tank, and associated pumps.

Major equipment includes:

Tailing thickeners - 2# 75m Dorr-Oliver Eimco thickeners complete with launders

Area 4000 - Tailing Storage Facility

The tailing storage facility consists of an earthen starter embankment that is
built up over time using sand from the hydro-cyclones processing the thickened
tailing. Fine tailing are deposited behind the tailing embankment. Supernatent
water from deposited tailing is recovered using 3 barges. The water is routed
using CS piping to the tailing cyclones and the Concentrator plant.


                                      A-3-9

Major Equipment includes:

Cyclones - primary stage -Krebs 2 banks of 20-model gMax15-3264 with 18
installed, secondary stage Krebs 1 bank of 26-model gMax26-3137 with 14
installed

Barge Pumps - 5 off on 2 barges plus 2 on 1 barge (total 7) Goulds VIT-FF 24x28
GHXC-30BHC c/w 1300 HP motors

Reclaim Distribution system - 4 off Goulds VIC-T 12x14x16 GHXC-16GHC, 6 stage
vertical turbine pumps c/w 800 HP motors

Booster Pumps - 2 stations each with 4 off ITT-Goulds model 9800 20x16L-WSFH/6V
c/w 1200 HP motors

Seepage Reclaim - 3 off Goulds VIT-FF 8x16 BLC 14 stage vertical turbine c/w 800
HP motors


                                     A-3-10

                                                                         Annex B
                                              to Physical Facilities Certificate

                               PHYSICAL FACILITIES
                                   DESCRIPTION



       Facility or Equipment Required
by Appendix [__] of the Master Participation       Description of Facility or
            Agreement, as amended                 Equipment Actually Installed
- --------------------------------------------   ---------------------------------
                                            

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------

- --------------------------------------------   ---------------------------------



                                     A-3-11

                                                                         Annex C
                                              to Physical Facilities Certificate

                               CAPITAL SPARES AND
                            KEY CONSUMABLES INVENTORY

[this list will be defined from the purchase orders issued for the approximately
     $14 million of spares allowed for in the budget - this document will be
   prepared by the Borrower at the time of completion and will be reviewed for
                 its reasonableness by the Independent Engineer]

      ALL SPARES ARE TO BE OF EQUIVALENT QUALITY TO THE ITEMS THEY REPLACE.

CAPITAL SPARES AND KEY CONSUMABLE INVENTORY

I.   REQUIRED CAPITAL SPARES

A.   HGPR MECHANICAL SPARES

     [TBD]

B.   HPGR DRIVE SPARES MOTOR

     [TBD]

C.   MAIN TRANSFORMER

     [TBD]

D.   GYRATORY CRUSHER SPARES

     [TBD]

E.   COARSE ORE CONVEYOR SYSTEM SPARES

     [TBD]

F.   BALL MILL SPARES

     [TBD]

G.   REGRIND VERTIMILL SPARES

     [TBD]


                                     A-3-12

H.   LIME VERTIMILL SPARES

     [TBD]

I.   THICKENER SPARES

     [TBD]

J.   CONCENTRATE SLURRY AGITATOR SPARES

     [TBD]

II.  REQUIRED CONSUMABLES INVENTORY

     [TBD]


                                     A-3-13

                                                                         Annex D
                                              to Physical Facilities Certificate

                 DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

                      [To be completed at time of delivery]


                                     A-3-14

                                                                    Appendix A-4
                                                         To Completion Guarantee

                    FORM OF INSURANCE COMPLETION CERTIFICATE

     I, [NAME OF SENIOR OFFICER OF BORROWER], [TITLE OF SENIOR OFFICER] of
Borrower, hereby certify, as of the date hereof, that all insurance coverage
required to be in full force and effect after the Start-up of Commercial
Production pursuant to Section 8.01 of the Master Participation Agreement is in
full force and effect in all material respects.

     This is the certificate referred to in clause (d) of Section 2.01 of the
Completion Guarantee dated as of September 30, 2005, among the Parent Companies,
the Administrative Agent and the Senior Facility Lenders, as the same may be
amended from time to time (the "Completion Guarantee"). Capitalized terms used
herein, except as otherwise defined herein, shall have the meanings assigned to
them in the Completion Guarantee or, if not defined therein, the meanings
assigned to them in Schedule Z to the Master Security Agreement, dated as of
September 30, 2005, among the Borrower, the Senior Lenders, the Lead JBIC
Arrangers, the Global Coordinators, the Lead Arrangers, the Administrative
Agent, the Trustee, the Offshore Collateral Agent and the Onshore Collateral
Agent, as the same may be amended from time to time (the "Master Security
Agreement").

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                     A-4-1

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER OF BORROWER] have caused
this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF SENIOR OFFICER OF BORROWER]


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

     Aon Risk Services, Inc., a _____________ organized under the laws of
____________, hereby certifies that it concurs with the certification of the
Borrower set forth hereinabove as of the date hereof.

     IN WITNESS WHEREOF, Aon Risk Services, Inc. has caused this certificate to
be duly executed.

Dated:
       -------------

                                        AON RISK SERVICES, INC.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                     A-4-2

                                                                    Appendix A-5
                                                         to Completion Guarantee

                      FORM OF LEGAL COMPLETION CERTIFICATE

     I, [NAME OF SENIOR OFFICER OF BORROWER], [TITLE OF SENIOR OFFICER] of the
Borrower, hereby certify that, as of the date hereof:

          (a) No MPA Default, MPA Event of Default, or Event of Political Force
     Majeure has occurred and is Continuing.

          (b) Each of the Project Documents and Security Documents is in full
     force and effect in all material respects or, in the case of Project
     Documents, has been replaced in accordance with the Master Participation
     Agreement with an agreement that is in full force and effect.

          (c) The Water License is in full force and effect in all material
     respects.

          (d) The security interests required under the Master Security
     Agreement and purported to be created by or pursuant to the Security
     Documents have been created and are perfected to the extent required under
     the Master Security Agreement and are in full force and effect in all
     material respects, subject to the qualifications and exceptions set forth
     in the opinion of Peruvian counsel to the Borrower delivered at Closing.

          (e) The Peruvian Governmental Approvals listed in Annex B have been
     obtained and are in full force and effect in all material respects.

          (f) All other material Peruvian Governmental Approvals, that are
     required as of the date hereof, for operation of the Sulfide Project and
     the Current Operations have been obtained and are in full force and effect
     in all material respects.

          (g) Each of the Offtake Agreements is in full force and effect.

          (h) Attached is a true and correct copy of a legal opinion of Rodrigo,
     Elias & Medrano, Abogados, Peruvian counsel to the Borrower,* substantially
     in

- ----------
*    This firm may be replaced by the Borrower with any other Peruvian counsel
     reasonably acceptable to the [Majority Facility Lenders].


                                     A-5-1

     the form attached hereto as Annex A and addressed to the undersigned and
     the Senior Facility Lenders, which confirms the matters set forth in
     paragraphs (c), (d) and (e) above.

     This is the certificate referred to in clause (e) of Section 2.01 of the
Completion Guarantee dated as of September 30, 2005, among the Parent Companies,
the Administrative Agent and the Senior Facility Lenders, as the same may be
amended from time to time (the "Completion Guarantee"). Capitalized terms used
herein, except as otherwise defined herein, shall have the meanings assigned to
them in the Completion Guarantee or, if not defined therein, the meanings
assigned to them in Schedule Z to the Master Security Agreement, dated as of
September 30, 2005, among the Borrower, the Senior Lenders, the Lead JBIC
Arrangers, the Global Coordinators, the Lead Arrangers, the Administrative
Agent, the Trustee, the Offshore Collateral Agent and the Onshore Collateral
Agent, as the same may be amended from time to time (the "Master Security
Agreement").

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                     A-5-2

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER OF BORROWER] have caused
this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF SENIOR OFFICER OF BORROWER]


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                     A-5-3

                                                                      Annex A to
                                                    Legal Completion Certificate

                              FORM OF LEGAL OPINION


                                     A-5-4

                              Legal opinion of Rodrigo, Elias & Medrano Abogados
                                                  (Legal Completion Certificate)

Lima, __________

Sociedad Minera Cerro Verde S.A.A.
[Japan Bank for International Cooperation]
[KfW]
[CALYON New York Branch]
[The Royal Bank of Scotland plc]
[The Bank of Nova Scotia]
[Mizuho Corporate Bank, Ltd.]
[Sumitomo Mitsui Banking Corporation, as Lead JBIC Arranger]
[The Bank of Tokyo-Mitsubishi, Ltd., as Lead JBIC Arranger]
[Other Senior Facility Lenders]

Ladies and Gentlemen:

We have acted as special Peruvian counsel to Sociedad Minera Cerro Verde S.A.A.
(the "Borrower") in connection with the Master Participation Agreement, dated
__________, among the Borrower, the Senior Facility Lenders, the Lead JBIC
Arrangers, the Global Coordinators, the Lead Arrangers and the Administrative
Agent.

Unless otherwise expressly provided herein, all capitalized terms used but not
defined herein shall have the respective meanings given to such terms in
Schedule Z to the Master Security Agreement referred to in Recital J of the
Master Participation Agreement. The term "Water License" shall mean [description
of the Water License]. The term "Security Agreements" shall mean, collectively,
the Mining Mortgage Agreement, dated __________, between the Borrower and the
Onshore Collateral Agent, [the Mortgage Agreement, dated __________, between the
Borrower and the Onshore Collateral Agent,](1) the Mining Pledge Agreement,
dated __________, between the Borrower and the Onshore Collateral Agent, the
Mining Floating Pledge Agreement, dated __________, between the Borrower and the
Onshore Collateral Agent, and the Share Pledge Agreement, dated __________,
among each of the Shareholders and the Onshore Collateral Agent. The term
"Opinion Peruvian

- ----------
(1)  Include only if required to be executed prior to rendering this opinion in
     accordance with the Master Participation Agreement.


                                     A-5-5

Governmental Approvals" shall mean, collectively, the Peruvian Governmental
Approvals listed in Exhibit A.

This opinion is delivered at the request of the Borrower in order to be attached
by the Borrower to the Legal Completion Certificate referred to in Section
2.01(e) of the Completion Guarantee.

In rendering this opinion, we have reviewed copies of the Water License and the
Opinion Peruvian Governmental Approvals and assumed that, at the time of so
doing, the officials which executed the Water License and the Opinion Peruvian
Governmental Approvals were duly authorized and had the power and authority to
execute the Water License and the Opinion Peruvian Governmental Approvals on
behalf of the relevant Peruvian Governmental Authority.

In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic originals of all documents submitted to us as copies. In
addition, we have examined such corporate records, certificates and other
documents of the Borrower and such certificates of CAVALI ICLV S.A., and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.

Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, we are of the opinion that:

1.   The Water License is in full force and effect in all material respects.

2.   The first priority Liens in favor of the Onshore Collateral Agent, for the
     benefit and on behalf of the Secured Parties, purported to be created by or
     pursuant to the Security Agreements are in full force and effect in all
     material respects.

3.   The Opinion Peruvian Governmental Approvals are in full force and effect in
     all material respects.

The foregoing opinions are limited to matters involving the laws of Peru and we
do not express any opinion as to the law of any other jurisdiction. Our opinions
set forth herein are based upon the facts in existence and laws in effect as of
the date hereof and we expressly disclaim any obligation to update our opinions
herein with respect to any changes in such facts or laws that may come to our
attention after delivery of this opinion.

We provide this opinion to you in our capacity as Peruvian counsel to the
Borrower and this opinion may not be relied for any purpose other than in


                                     A-5-6

connection with the Legal Completion Certificate referred to in Section 2.01(e)
of the Completion Guarantee without, in each instance, our prior written
consent.

Very truly yours,


- -------------------------------------


                                     A-5-7

                                    Exhibit A

                 List of Opinion Peruvian Governmental Approvals

- -    Third phase of the approval of the Beneficiation Concession expansion by
     the General Directorate of Mining of the Ministry of Energy and Mines;

- -    Approval of the Mines Closure Plan for the Sulfide Project by the General
     Directorate of Mining Environmental Affairs of the Ministry of Energy and
     Mines;

- -    Approval of the Environmental Impact Study for the 220 KV transmission line
     by the General Directorate of Environmental Affairs of the Ministry of
     Energy and Mines;

- -    Approval of the concession for the 220 KV transmission line by the General
     Directorate of Electricity of the Ministry of Energy and Mines; and

- -    Approval of the amendment to the Environmental Impact Study for the Sulfide
     Project regarding the bi-modal transport of concentrates to the Port of
     Matarani by the General Directorate of Mining Environmental Affairs of the
     Ministry of Energy and Mines and the Ministry of Transportation and
     Communications.


                                     A-5-8

                                                                      Annex B to
                                                    Legal Completion Certificate

                PERUVIAN GOVERNMENTAL APPROVALS TO BE COVERED IN
                            COMPLETION LEGAL OPINION

- -    Approval of the Closure Plan for the Mines and the Sulfide Project by the
     Ministry of Energy and Mines.

- -    Approval of the Environmental Impact Study for the 220 KV line by the
     Ministry of Energy and Mines.

- -    Approval by the Electrical Direction of the Ministry of Energy and Mines of
     the concession for the 220 KV Transmission Line.

- -    Third phase of the approval of the beneficiation concession expansion and
     the construction permit to be granted after completion of the construction
     and inspection process.

- -    Approval of an amendment to the Environmental Impact Study for the Sulfide
     Project regarding the bi-modal transport of concentrates to the Matarani
     port.


                                     A-5-9

                                                                    Appendix A-6
                                                         to Completion Guarantee

                  FORM OF I.A. FINANCIAL COMPLETION CERTIFICATE

     We, [NAME OF INDEPENDENT PUBLIC ACCOUNTANTS], Independent Public
Accountants of the Borrower, hereby certify that, as of the month-end
immediately preceding the date hereof:

          (a) The credit balance of the Senior Debt Service Reserve Sub-Account
     is equivalent to or greater than fifty percent (50%) of the next succeeding
     Senior Debt Service Installment.

          (b) The Borrower does not have Working Capital Debt outstanding.

     This is the certificate referred to in clause (f) of Section 2.01 of the
Completion Guarantee dated as of September 30, 2005, among the Parent Companies,
the Administrative Agent and the Senior Facility Lenders, as the same may be
amended from time to time (the "Completion Guarantee"). Capitalized terms used
herein and in any annex hereto, except as otherwise defined herein, shall have
the meanings ascribed thereto in the Completion Guarantee or, if not defined
therein, the meanings ascribed to such terms in Schedule Z to the Master
Security Agreement among the Borrower, the Senior Lenders, the Lead JBIC
Arrangers, the Global Coordinators, the Lead Arrangers, the Administrative
Agent, the Trustee, the Offshore Collateral Agent and the Onshore Collateral
Agent dated as of September 30, 2005, as the same may be amended from time to
time (the "Master Security Agreement").

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      A-6-1

     IN WITNESS WHEREOF, we, [NAME OF INDEPENDENT PUBLIC ACCOUNTANTS], have
caused this certificate to be duly executed.

Dated:
       -------------
                                        [NAME OF INDEPENDENT PUBLIC ACCOUNTANTS]


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                     A-6-2

                                                                    Appendix A-7
                                                         to Completion Guarantee

                FORM OF BORROWER FINANCIAL COMPLETION CERTIFICATE

     I, [NAME OF SENIOR OFFICER OF THE BORROWER], hereby certify that, as of the
month-end immediately preceding the date hereof:

     (a)  All undisputed amounts owing to Fluor Daniel Sucursal Del Peru and
          Fluor Canada Ltd. pursuant to the Construction Agreements have either
          been paid in full or have been fully reserved by the Borrower.

     This is the certificate referred to in clause (g) of Section 2.01 of the
Completion Guarantee dated as of September 30, 2005, among the Parent Companies,
the Administrative Agent and the Senior Facility Lenders, as the same may be
amended from time to time (the "Completion Guarantee"). Capitalized terms used
herein, except as otherwise defined herein, shall have the meanings assigned to
them in the Completion Guarantee or, if not defined therein, the meanings
assigned to them in Schedule Z to the Master Security Agreement, dated as of
September 30, 2005, among the Borrower, the Senior Lenders, the Lead JBIC
Arrangers, the Global Coordinators, the Lead Arrangers, the Administrative
Agent, the Trustee, the Offshore Collateral Agent and the Onshore Collateral
Agent, as may be amended from time to time (the "Master Security Agreement").

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                     A-7-1

     IN WITNESS WHEREOF, I, [NAME OF AUTHORIZED OFFICER OF BORROWER] have caused
this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF AUTHORIZED OFFICER OF BORROWER]


                                        By
                                           -------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                     A-7-2

                                                                    Appendix A-8
                                                         to Completion Guarantee

                        FORM OF ENVIRONMENTAL CERTIFICATE

     I, [NAME OF SENIOR OFFICER], [TITLE OF SENIOR OFFICER] of the Borrower,
hereby attests that, as of the date hereof:

          (a) Construction of the Sulfide Project complies in all material
     respects with, and the Sulfide Project is being operated in all material
     respects in compliance with, the Environmental Guidelines.

          (b) Construction of the Sulfide Project and the operations and
     properties of the Borrower are in compliance with the JBIC Environmental
     Guidelines, except for any immaterial issues of non-compliance of which the
     Borrower is not specifically aware and as to which no remedial action has
     been requested by any applicable Governmental Authority.

          (c) The independent review board of the Sulfide Project has approved
     the Operational and Maintenance and Instrumentation Procedure Manuals for
     the Tailings Storage Facility, which plans were developed by the Borrower
     as required by Annex D (Application of the EA to Large Dams and Reservoirs)
     of Operational Policy 4.01 (Environmental Assessment).

          (d) The Closure Plan has been submitted in final form to all
     applicable Governmental Authorities and is in compliance with the
     Environmental Guidelines and all applicable Peruvian environmental laws,
     rules and regulations of the applicable Governmental Authorities, except
     where non-compliance is immaterial and all reasonable efforts are being
     made to promptly remedy such non-compliance.

          (e) Construction of the Sulfide Project conforms with, and the Sulfide
     Project is being operated in compliance with, all applicable Peruvian
     environmental laws, rules and regulations, except where non-compliance is
     immaterial and all reasonable efforts are being made to promptly remedy
     such non-compliance.

     This is the certificate referred to in paragraph (h) of Section 2.01 of the
Completion Guarantee dated as of September 30, 2005, among the Parent Companies,
the Administrative Agent and the Senior Facility Lenders, as the same may be
amended from time to time (the "Completion Guarantee"). Capitalized terms used
herein, except as otherwise defined in the Completion Guarantee, shall have the
meanings ascribed thereto


                                     A-8-1

in Schedule Z to the Master Security Agreement among the Borrower, the Senior
Lenders, the Lead JBIC Arrangers, the Global Coordinators, the Lead Arrangers,
the Administrative Agent, the Trustee, the Offshore Collateral Agent and the
Onshore Collateral Agent dated as of September 30, 2005, as the same may be
amended from time to time (the "Master Security Agreement").


                                     A-8-2

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER], have caused this
certificate to be duly executed.

Dated:
       -------------

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title: Senior Officer


                                     A-8-3

     We, [NAME OF INDEPENDENT ENGINEER] organized under the laws of
_____________ have performed such inspections, observations, analyses and other
procedures which we have, in our reasonable judgment, deemed necessary for
purposes of this certificate. Such procedures, and the names of our employees or
agents who performed them, are described in Annex A to this certificate. Based
on such procedures, we hereby certify that we have no reason to believe that the
certifications of the Borrower set forth in paragraphs (a) and (b) above are not
true and correct in all material respects as of the date hereof.

     IN WITNESS WHEREOF, [NAME OF SENIOR OFFICER OF INDEPENDENT ENGINEER] has
caused this certificate to be duly executed.

Dated:
       -------------

                                        [Name of Independent Engineer]


                                        By:
                                            ------------------------------------
                                        [Name]
                                               ---------------------------------
                                        [Position]
                                                   -----------------------------


                                     A-8-4

                                                                         Annex B
                                                                 To Appendix A-8

     "Environmental Guidelines": means to the extent applicable under the
Equator Principles (a) World Bank Environmental, Health and Safety Guidelines
(i) Mining and Milling - Open Pit dated August 11, 1995, (ii) Pollution
Abatement and Prevention Handbook 1998: General Environmental Guidelines, (iii)
Operational Policy 4.01 (Environmental Assessment), (iv) Operational Policy 4.04
(Natural Habitats), (v) Operational Policy 4.11 (Cultural Property), (vi) with
respect to the tailings dam, Operational Policy 4.37 (Dam Safety), and (vii)
Pollution Abatement and Prevention Handbook 1998: Part III Project Guidelines,
Monitoring, and Base Metal and Iron Ore Mining, each as in effect as of the date
of the Master Participation Agreement, and (b) IFC Safeguard Policies dated
September 1998 as in effect as of the date of the Master Participation
Agreement.

                                                                    Appendix A-9
                                                         to Completion Guarantee

               FORM OF PRODUCTION CERTIFICATE - PARTIAL COMPLETION

          I, [NAME OF SENIOR OFFICER], [title of Senior Officer] of the
     Borrower, hereby certify that:

     (a) Attached to this certificate as Annex B are copies of operating
records, bills of lading and other data and documentation relating to production
by the Borrower during the periods referred to in clause (e) below. Such
documentation accurately reflects, in all material respects, the production of
the Borrower during the period to which it relates, and evidences compliance
with the certifications set forth in sections (i) through (vii) of clause (g)
below.

     (b) All sampling procedures relevant to the matters covered by this
certificate were conducted by the Borrower in accordance with standard
international mining practices; all assaying was conducted by the Borrower in
accordance with standard international mining practices. The sampling locations
and laboratory assay procedures have been verified by the Independent Engineer.

     (c) The Independent Engineer was provided with the Borrower's most recently
approved Three Year Budget Plan (the "Reference Budget Plan") that covers the
Completion Test Period, together with (i) the current block model and mine plan
(together, the "Current Mine Plan") related to the Reference Budget Plan and
(ii) the past 12 months' operating reports for the Borrower. The Reference
Budget Plan and the Current Mine Plan are in all material respects consistent
with, and contemplate life-of-loan operating and production results not
materially divergent from those projected in, the Primary Sulfide Mine Plan and
Project Financial Model (together, the "2005 Plan") on which the April 7, 2005
Information Memorandum delivered to the Senior Facility Lenders was based
(except for such material changes thereto, if any, as have been previously
furnished to the Senior Facility Lenders, reported on by the Independent
Engineer, and approved by the Majority Facility Lenders). [SELECT ONE: "The
foregoing certification can be made" OR "The foregoing certification cannot be
made. Accordingly, all subsequent references in this Certificate to "Reference
Budget Plan" and "Current Mine Plan" shall mean the 2005 Plan."]

     (d) The Reference Budget Plan was provided to the Independent Engineer at
least 30 Business Days' prior to the start of the Completion Test Period. Notice
of the start of the Completion Test Period was given to the Independent Engineer
at least 15 days prior to the start of such period. The Current Mine Plan was
substantially adhered to during the Completion Test Period.

     (e) The "Completion Test Period" began on [start date] and ended on [date],
and comprised at least 45 Operating Days falling outside of the traditional
"wet" months of January, February and March.

     (f) For purposes of this certificate,

          (i)  "Completion Test Period" is defined as a period of 90 Operating
               Days in any 100-day continuous period.

          (ii) "Operating Day" is defined as any day other than a day on which
               (a) the operations of the Sulfide Project ceased for more than 12
               continuous hours due to force majeure or (b) work at the Sulfide
               Project was prohibited by applicable law or labor agreement.

          (iii) "force majeure" is defined as an act of God, labor dispute and
               industrial action of any kind (including, without limitation, a
               strike, interruption, slowdown and other similar action on the
               part of organized labor), a lockout, act of the public enemy, war
               (declared or undeclared), civil war, sabotage, blockade,
               revolution, riot, insurrection, civil disturbance, terrorism,
               epidemic, cyclone, tidal wave, landslide, lightning, earthquake,
               flood, storm, fire, adverse weather conditions, expropriation,
               nationalization, act of eminent domain, laws, rules, regulations
               or orders of governmental authority, acts of other private and
               public companies, explosion, breakage or accident to machinery or
               equipment or pipe or transmission line or other facility not of a
               systemic nature, embargo, inability to obtain or delay in
               obtaining equipment, materials, transport, event of political
               force majeure or any event whether similar to the foregoing or
               not which is not within the reasonable control of the Borrower,
               and which has a material adverse effect on the ability of the
               Borrower to perform its obligations, including, without
               limitation, such event which has a material adverse effect on the
               ability of the Borrower to mine, produce or ship copper
               concentrate.

     (g) COMPLETION TEST.

     During the Completion Test Period, the Borrower achieved the following
results of operations at the Sulfide Project and (in the case of items (iii) and
(vi) below) at its oxide processing and cathode production facilities:

     (i)  MINE TEST:

          -    Total mined tonnage (including to and from the ore stockpiles)
               during the Completion Test Period was at least 75% of the planned
               tonnage for such period as forecast in the Current Mine Plan.

     (ii) MILL TEST:

          -    The Borrower milled ore during the Completion Test Period at an
               average rate of at least 75% of 108,000 tons per day.

          -    The Borrower produced copper in concentrate during the Completion
               Test Period totaling at least 75% of planned tonnes of copper in
               concentrate as forecast in the Reference Budget Plan for such
               period.


                                      A-9-2

          -    Copper concentrates produced during the Completion Test Period
               had an average copper grade at least equal to 90% of planned
               concentrate grade as forecast in the Reference Budget Plan for
               such period.

          -    Contained molybdenum recovered in molybdenum concentrate produced
               during the Completion Test Period was at least 50% of the planned
               recoverable molybdenum forecast in the Reference Budget Plan for
               such period.

          -    If the copper head grade during the Completion Test Period was
               more than 120% of the grade contemplated in the Reference Budget
               Plan for such period, then mill copper recovery was at least 90%
               of the recovery forecast in the Reference Budget Plan for such
               period (with Recovery = 100 x (C/H) x (H-T)/(C-T), where H, T, C
               are head, tail and concentrate % Cu).

     (iii) INFRASTRUCTURE TEST:

          -    Fresh Water Make-Up. The fresh water pumping system is capable of
               pumping at a rate at least 100% of the required make-up water
               defined in the water balance calculation based on the Borrower's
               actual operations and has pumped at a rate at least 90% of design
               capacity for at least one hour, and such capability and
               performance are demonstrated in the results (furnished to the
               Independent Engineer) of the mechanical completion test performed
               by Fluor and accepted by the Borrower under the Construction
               Agreements.

          -    Electrical Supply System. The new installed electrical supply
               system (substation, power line and power distribution system) has
               installed capacity to meet at least 90% of the design power
               requirements specified in the Fluor scope of work under the
               Construction Agreements which may be modified from time to time
               and which shall include the design power requirements specified
               in the Feasibility Study, and such capacity is demonstrated in
               the results (furnished to the Independent Engineer) of the
               mechanical completion test performed by Fluor and accepted by the
               Borrower under the Construction Agreements. During the Completion
               Test Period, 100% of the required power demand for the operation
               of the Primary Sulfide facilities was provided from the national
               power grid system.


                                      A-9-3

     (iv) TAILING STORAGE:

          -    Viewed at the end of the Completion Test Period, the tailing
               production and hydro-cyclones system produced sufficient quantity
               and quality of sand material (at normal particle size) necessary
               to allow the dam embankment construction to contain the total
               volume of tailings produced to the end of the Completion Test
               Period (including the specified safety margin of freeboard as
               specified in the design parameters set forth in the Feasibility
               Study, as may be modified by the independent review board); and
               the to-date history of dam construction, at the beginning and at
               the end of the Completion Test Period, has been provided to the
               Independent Engineer to demonstrate the foregoing.

     (v)  SHIPPING AND QUALITY TESTS:

          -    90% of the copper concentrate tonnage produced during the
               Completion Test Period has been loaded onto ships for shipment
               (or alternatively loaded onto trucks for transport) to a
               processor during the 120-day period that includes the Completion
               Test Period.

          -    For all copper concentrate shipments for which settlement was
               made during the three-month period ending at the commencement of
               the Completion Test Period, total penalties (price reductions)
               assessable under applicable Sales Contracts did not exceed 5% of
               total sales price of such copper concentrate.

     (vi) CATHODE PRODUCTION:

          -    The Borrower produced cathodes during the six-month period ending
               at the end of the Completion Test Period totaling not less than
               90% of the total cathode production forecast in the Reference
               Budget Plan.

     (vii) EFFICIENCY TEST:

          -    The aggregate efficiency measure [(described in clause (c)(III)
               of the Efficiency Test description)] during the Completion Test
               Period did not exceed 115%.

This is the certificate referred to in paragraph (a) of Section 2.02 of the
Completion Guarantee, dated as of September 30, 2005, among the Parent
Companies, the Administrative Agent and the Senior Facility Lenders, as the same
may be amended from time to time (the "Completion Guarantee"). Capitalized terms
used herein, except as otherwise defined herein, shall have the meanings
assigned to them in the Completion Guarantee or, if not defined therein,
Schedule Z to the Master Security Agreement, dated as of September 30, 2005,
among the Borrower, the


                                      A-9-4

Senior Lenders, the Lead JBIC Arrangers, the Global Coordinators, the Lead
Arrangers, the Administrative Agent, the Trustee, the Offshore Collateral Agent
and the Collateral Agent, as the same may be amended from time to time (the
"Master Security Agreement").

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER], on behalf of the Borrower
have caused this certificate to be duly executed.

Dated:
       -------------

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      A-9-5

Annex A to

                             Production Certificate

     [NAME OF INDEPENDENT ENGINEER] a _______________ organized under the laws
of _____________ have performed such inspections, observations, analyses and
other procedures which we have, in our reasonable judgment, deemed necessary for
purposes of this certificate. Such procedures, and the names of our employees or
agents who performed them, are described in Annex C to the Production
Certificate.

     Based on such procedures, we hereby certify that (1) we have no reason to
believe that any of the certifications of the Borrower set forth hereinabove is
not true and correct in all material respects as of the date hereof, (2) we
concur with the statement made in the second sentence of paragraph (c) of the
foregoing certificate and (3) in our professional opinion the operations of the
Borrower at the levels demonstrated during the Completion Test Period (as a
percentage of projected results in the Reference Budget Plan and Current Mine
Plan) are achievable and sustainable over the projected loan life as a technical
operating matter.

     IN WITNESS WHEREOF, [NAME OF SENIOR OFFICER OF INDEPENDENT ENGINEER] has
caused this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF INDEPENDENT ENGINEER]


                                        BY:
                                            ------------------------------------
                                        [NAME]
                                               ---------------------------------
                                        [POSITION]
                                                   -----------------------------


                                      A-9-6

                                   Annex B to
                             Production Certificate

[Attach copies of operating records, bills of lading and other data and
documentation relating to Sulfide Project and cathode production and operations
during relevant period, including data demonstrating compliance with the
certifications set forth in the Production Certificate.]


                                      A-9-7

                                   Annex C to
                             Production Certificate

                 DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

[To be completed at time of delivery]


                                      A-9-8

                                                                   Appendix A-10
                                                         to Completion Guarantee

               FORM OF EFFICIENCY CERTIFICATE - PARTIAL COMPLETION

     I, [NAME OF SENIOR OFFICER], [title of Senior Officer] of the Borrower,
hereby certify that:

     (a) Attached to this certificate as Annex B are copies of operating records
and other data and documentation relating to production by and operation of the
Sulfide Project during the Completion Test Period referred to in clause (b)
below. Such documentation accurately reflects, in all material respects, the
production and operation of the Sulfide Project during the period to which it
relates, and evidences compliance with the certification set forth in clause
(c)(III) below.

     (b) (i) For purposes of this Certificate, the "Completion Test Period" is
the same as the Completion Test Period referred to in the Production Certificate
dated the date hereof provided by the Borrower to the Senior Facility Lenders
(the "Production Certificate").

          (ii) The forecast usage, forecast consumption and forecast
productivity figures set forth in each test below, identified in bold typeface,
are based on the 2005 Plan. If the Reference Budget Plan used for the Production
Certificate is different from the 2005 Plan but has been approved or certified
(by the Borrower and Independent Engineer) as contemplated in clause (c) and
Annex A of the Production Certificate, then such forecast figures will be
adjusted to reflect the differences, provided the Independent Engineer concurs
with such adjustments.

          (iii) If the actual average mine truck haulage distance during the
Completion Test Period varies from the forecast average distance by more than
10%, then, the forecast usage, forecast consumption and forecast productivity
figures set forth in each of clauses (A), (C), (D) and (E) of the mine test in
clause (c)(I) below, identified in bold typeface, will be adjusted by that
percentage difference.

     (c) EFFICIENCY TESTS

          (I)  MINE. The relevant percentages to be computed (based on actual
               performance during the Completion Period) and relative weightings
               are the following:

               (A)  FUEL:

                    Percentage: Average mining fleet diesel consumption per
                    operating hour during the Completion Test Period, in gallons
                    per operating truck hour, as a percentage of the forecast
                    consumption of 41.4 U.S. GAL./hr.

                    Weighting: 10.0%

               (B)  LOADING:

                    Percentage: Shovel operating hours to total tonnes of
                    material loaded on mine trucks during the Completion Test
                    Period as measured by the mine dispatch system, in mine
                    operating hours to


                                     A-10-1

                    dry metric tonnes, as a percentage of the forecast ratio of
                    1 hr per 4,329 DMT.

                    Weighting: 6.0%

               (C)  HAULAGE:

                    Percentage: Truck operating hours to total tonnes of
                    material hauled from the mine and the ore stockpiles during
                    the Completion Test Period as measured by the mine dispatch
                    system, in mine operating hours to dry metric tonnes, as a
                    percentage of the forecast ratio of 1 hr per 548 DMT.

                    Weighting: 12.0%

               (D)  LABOR:

                    Percentage: Total mine workforce operating hours to tonnes
                    of material (including ore stockpiles) moved during the
                    Completion Test Period, in mine workforce operating hours to
                    dry metric tonnes, as a percentage of the forecast
                    productivity ratio of 1 hr per 99.5 DMT.

                    Weighting: 8.0%

               (E)  TIRES:

                    Percentage: Average mileage-life per mine truck tire (before
                    replacement), in total tires used to total miles of mine
                    truck haulage over the twelve-months period ending at the
                    end of the Completion Test Period, as a percentage of the
                    forecast rate of 1 tire per 64,000MI., provided that the
                    Independent Engineer may agree to a substantially equivalent
                    test.

                    Weighting: 4.0%

          (II) MILL. The relevant percentages to be computed (based on actual
               performance during the Completion Test Period) and relative
               weightings are the following:

               (A)  POWER:

                    Percentage: Average electricity consumption per tonne of ore
                    milled (including concentrator, water supply and water
                    return) during the Completion Test Period, in kilowatt hours
                    per dry metric tonne of ore milled, as a percentage of the
                    forecast rate of 22 KWH/dmt.


                                     A-10-2

                    Weighting: 33.0%

               (B)  LABOR:

                    Percentage: Average daily total mill workforce to total
                    tonnes of ore milled during the Completion Test Period, in
                    size of workforce to dry metric tonnes of ore milled, as a
                    percentage of the forecast productivity ratio of 1 worker
                    per 341DMT.

                    Weighting: 12.0%

               (C)  WATER:

                    Percentage: Average liters of fresh water utilized per tonne
                    of ore milled during the Completion Test Period, in liters
                    per dry metric tonne of ore milled, as a percentage of the
                    forecast usage rate of 516 L/dmt.

                    Weighting: 6.0%

               (D)  LIME:

                    Percentage: Average kilograms of lime utilized per tonne of
                    ore milled during the Completion Test Period, in kilograms
                    per dry metric tonne of ore milled, as a percentage of the
                    forecast usage rate of 1.1 KG/dmt.

                    Weighting: 6.0%

               (E)  FLOCCULANT:

                    Percentage: Average grams of flocculant utilized per tonne
                    of ore milled during the Completion Test Period, in grams
                    per dry metric tonne of ore milled, as a percentage of the
                    forecast usage rate of 14 G/dmt.

                    Weighting: 3.0%

          (III) COMPOSITE TEST. Based on the actual performance of the Sulfide
               Project during the Completion Test Period, the weighted average
               of the percentages computed under clauses (A) through (E) of
               Section I and clauses (A) through (E) of Section II above,
               combined, did not exceed 115%.

This is the certificate referred to in paragraph (b) of Section 2.02 of the
Completion Guarantee, dated as of September 30, 2005, among the Parent
Companies, the Administrative Agent and the Senior Facility Lenders, as the same
may be amended from time to time (the "Completion Guarantee"). Capitalized terms
used herein, except as otherwise defined herein, shall have the


                                     A-10-3

meanings assigned to them in the Completion Guarantee or, if not defined
therein, Schedule Z to the Master Security Agreement, dated as of September 30,
2005, among the Borrower, the Senior Lenders, the Lead JBIC Arrangers, the
Global Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
the Offshore Collateral Agent and the Collateral Agent, as the same may be
amended from time to time (the "Master Security Agreement").

     IN WITNESS WHEREOF, I, [NAME OF SENIOR OFFICER], on behalf of the Borrower
have caused this certificate to be duly executed.

Dated:
       -------------

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------

                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                     A-10-4

                                   Annex A to

                             Efficiency Certificate

     [NAME OF INDEPENDENT ENGINEER] a _______________ organized under the laws
of _____________ have performed such inspections, observations, analyses and
other procedures which we have, in our reasonable judgment, deemed necessary for
purposes of this certificate. Such procedures, and the names of our employees or
agents who performed them, are described in Annex C to this certificate.

     Based on such procedures, we hereby certify that (1) we have no reason to
believe that any of the certifications of the Borrower set forth hereinabove is
not true and correct in all material respects as of the date hereof, and (2) we
concur with the adjustments (if any) made to original forecasted figures in
accordance with paragraph (ii) and paragraph (iii) of clause (b) of the
foregoing certificate.

     IN WITNESS WHEREOF, [NAME OF SENIOR OFFICER OF INDEPENDENT ENGINEER] has
caused this certificate to be duly executed.

Dated:
       -------------

                                        [NAME OF INDEPENDENT ENGINEER]


                                        By:
                                            ------------------------------------

                                            ------------------------------------
                                        [Name]
                                               ---------------------------------
                                        [Position]
                                                   -----------------------------


                                     A-10-5

                                   Annex B to

                             Efficiency Certificate

[Attach copies of operating records and other data and documentation relating to
Sulfide Project production and operations during relevant period, including data
demonstrating compliance with the certifications set forth in the Efficiency
Certificate.]


                                     A-10-6

                                   Annex C to
                             Efficiency Certificate

                 DESCRIPTION OF INDEPENDENT ENGINEER PROCEDURES

                      [To be completed at time of delivery]


                                     A-10-7

EX-10.3

                                                                    Exhibit 10.3

                                                                  EXECUTION COPY

================================================================================

                            MASTER SECURITY AGREEMENT

                                      among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                  as Borrower,

                    JAPAN BANK FOR INTERNATIONAL COOPERATION,
                          as a Senior Facility Lender,

                      SUMITOMO MITSUI BANKING CORPORATION,
                 as a Lead JBIC Arranger and Global Coordinator,

                       THE BANK OF TOKYO-MITSUBISHI, LTD.,
                            as a Lead JBIC Arranger,

                                      KfW,
                          as a Senior Facility Lender,

                             CALYON NEW YORK BRANCH,
       as a Senior Facility Lender, Lead Arranger and Global Coordinator,

                         THE ROYAL BANK OF SCOTLAND PLC,
                 as a Senior Facility Lender and Lead Arranger,

                            THE BANK OF NOVA SCOTIA,
                 as a Senior Facility Lender and Lead Arranger,

                          MIZUHO CORPORATE BANK, LTD.,
                 as a Senior Facility Lender and Lead Arranger,

                             CALYON NEW YORK BRANCH,
                            as Administrative Agent,

                                 CITIBANK, N.A.,
                    as Trustee and Offshore Collateral Agent,

                                       and

                             CITIBANK DEL PERU S.A.,
                           as Onshore Collateral Agent

                         Dated as of September 30, 2005

================================================================================

                                                                  EXECUTION COPY

                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I    DEFINITIONS AND INTERPRETATION..............................      3
   1.01      Definitions.................................................      3
   1.02      Interpretation..............................................      3

ARTICLE II   SENIOR LOANS................................................      4
   2.01      Secured Obligations Secured Hereby..........................      4

ARTICLE III  COLLATERAL..................................................      4
   3.01      Mortgages and Pledges at Closing............................      4
   3.02      Sales Agreements............................................      5
   3.03      Rights Under Certain Agreements.............................      6
   3.04      Water Rights................................................      7
   3.05      Interest in Accounts........................................      7
   3.06      Insurance and Insurance Proceeds............................      8
   3.07      SMCV Shares.................................................      8
   3.08      Subordinated Loans and Subordinated Notes...................      8
   3.09      Pledge of Project Property at Other Times...................      9
   3.10(A)   Filings and Registration Generally..........................     10
   3.10(B)   Perfection and Maintenance of Security Interests............     11
   3.10      Rights in Collateral Prior to Enforcement Action............     12
   3.11      Release of Security Interest................................     13
   3.12      Foreclosure.................................................     13

ARTICLE IV   SPECIAL ACCOUNTS SYSTEM.....................................     14
   4.01      Creation of the Accounts....................................     14
   4.02      Transfers to the Proceeds Account...........................     17
   4.03      Transfers from the Proceeds Account.........................     17
   4.04      Transfers from Senior Debt Accumulation Sub-Account.........     19
   4.05      Transfers from Senior Debt Service Reserve Sub-Account......     20
   4.06      Transfers from Extraordinary Major Maintenance Reserve
             Sub-Account.................................................     20
   4.07      Transfers from the Tax Contingency Reserve Sub-Account......     21
   4.08      Transfers from the Power Generator Reserve Sub-Account......     21
   4.09      Transfers from the Restricted Payment Sub-Account...........     21
   4.10      Withdrawals to Pay Senior Loans Obligations.................     22
   4.11      Onshore Dollars Account.....................................     23
   4.12      Operating Onshore Dollars Account...........................     23
   4.13      Onshore Nuevos Soles Account................................     24
   4.14      Operating Onshore Nuevos Soles Account......................     25
   4.15      Provisions Common to the Onshore Accounts...................     25
   4.16      Directions for Withdrawal and Transfer......................     25
   4.17      Waterfall During Continuation of Borrower Event of Default
             or Event of Political Force Majeure.........................     26
   4.18      Waterfall Following Borrower Enforcement Direction..........     26


                                                                           
   4.19      Acceptable Credit Support Instruments.......................     27
   4.20      Investment of Funds in Accounts.............................     28
   4.21      Currencies..................................................     29
   4.22      Interest....................................................     29
   4.23      Reports to the Borrower and the Senior Lenders..............     29
   4.24      Limitations on Trustee's, Offshore Collateral Agent's and
             Onshore Collateral Agent's Duties...........................     30
   4.25      Books and Records...........................................     30
   4.26      Stamp and Other Similar Taxes...............................     31
   4.27      Inadequately Identified Amounts.............................     31

ARTICLE V    REMEDIES....................................................     31
   5.01      First Stage Remedies........................................     31
   5.02      Second Stage Remedies.......................................     35
   5.03      Borrower Enforcement Action by Offshore Collateral Agent and
             Onshore Collateral Agent....................................     36
   5.04      Incidents of Sale...........................................     37
   5.05      Control of Borrower Enforcement Action by Administrative
             Agent.......................................................     38
   5.06      Control of Borrower Enforcement Action by Offshore
             Collateral Agent and Onshore Collateral Agent...............     39
   5.07      Limitation on Borrower Enforcement Action...................     39
   5.08      Application of Proceeds.....................................     40
   5.09      Offshore Collateral Agent and Onshore Collateral Agent May
             File Proofs of Claim........................................     41
   5.10      Rights Arising Upon the Occurrence of an Event of Political
             Force Majeure...............................................     41

ARTICLE VI   INTERCREDITOR ARRANGEMENTS..................................     42
   6.01      Appointment of the Appointed Parties........................     42
   6.02      Authority to Act............................................     42
   6.03      Senior Lenders Actions......................................     42
   6.04      Certain Actions by the Offshore Collateral Agent............     46
   6.05      Certain Actions by the Onshore Collateral Agent.............     46
   6.06      Sharing of Non-Pro Rata Payments............................     46
   6.07      Administrative Agent as Agent...............................     47
   6.08      Attorney-in-Fact............................................     47
   6.09      Senior Lenders Vote and Senior Facility Lenders' Vote.......     48
   6.10      Meetings of Senior Lenders..................................     49

ARTICLE VII  PROVISIONS COMMON TO THE APPOINTED PARTIES..................     49
   7.01      Delivery of Documentation...................................     49
   7.02      Reliance....................................................     50
   7.03      Liability...................................................     50
   7.04      Consultation with Counsel, etc..............................     50
   7.05      Duties......................................................     50
   7.06      Resignation, Replacement and Successor......................     51
   7.07      Indemnity...................................................     52




                                       ii

                                                                           
   7.08      Compensation................................................     53
   7.09      Certificates................................................     53
   7.10      Merger of Appointed Party...................................     53
   7.11      Appointed Parties in Their Individual Capacity..............     54
   7.12      Miscellaneous...............................................     54
   7.13      Exculpatory Provisions......................................     54
   7.14      Miscellaneous...............................................     55
   7.15      Assignment of Rights, Not Assumption of Duties..............     55
   7.16      Appointment of Sub-Agent of the Offshore Collateral Agent or
             the Onshore Collateral Agent................................     55
   7.17      Limitation on Duty of Collateral Agents in Respect of
             Collateral; Indemnification.................................     56

ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF THE APPOINTED PARTIES.....     57
   8.01      Due Incorporation; Power....................................     57
   8.02      No Conflict.................................................     57
   8.03      Registrations, Declarations.................................     57
   8.04      Due Execution...............................................     57

ARTICLE IX   MISCELLANEOUS...............................................     58
   9.01      Accession Agreement.........................................     58
   9.02      Effectiveness...............................................     58
   9.03      Termination.................................................     58
   9.04      Notices.....................................................     59
   9.05      Entire Agreement............................................     61
   9.06      Amendments and Waivers......................................     61
   9.07      Benefits of Agreement.......................................     62
   9.08      Successors and Assigns......................................     62
   9.09      GOVERNING LAW...............................................     62
   9.10      Consent to Jurisdiction.....................................     62
   9.11      No Trial by Jury............................................     63
   9.12      Remedies....................................................     63
   9.13      Currency Equivalents........................................     63
   9.14      Severability................................................     64
   9.15      Execution in Counterparts...................................     64
   9.16      No Partnership..............................................     64



SCHEDULE

Schedule A   List of Concessions
Schedule Z   Definitions


                                       iii



EXHIBIT
- -------
           
Exhibit A     Form of hipoteca minera
Exhibit B     Form of prenda minera (equipment, machinery and movable assets)
Exhibit C     Form of prenda minera (minerals and Cathode and Concentrate in
              inventory)
Exhibit D     Form of cesion condicionada de derechos for Domestic Sales
              Agreements
Exhibit E-1   Form of Notarial Notice
Exhibit E-2   Form of Domestic Buyer's Consent
Exhibit E-3   Form of Non-Domestic Buyer's Consent
Exhibit F     Form of Contrato de Cuenta Escrow for Onshore Accounts
Exhibit G     Form of prenda for SMCV Shares
Exhibit H     Form of hipoteca
Exhibit I     Form of prenda industrial
Exhibit J     Form of New Party Accession Agreement
Exhibit K     Form of Acceptable Letter of Credit
Exhibit L     Form of Incumbency Certificate for Account Transactions
Exhibit M     Form of Incumbency Certificate
Exhibit N     Form of Withdrawal Certificate
Exhibit O-1   Form of Acceptable Guarantee
Exhibit O-2   Form of Acceptable Guarantee - Completion Guarantee Acceleration
              Event



                                       iv

                            MASTER SECURITY AGREEMENT

     This MASTER SECURITY AGREEMENT, dated as of September 30, 2005 (this
"Agreement"), is made by and among:

     SOCIEDAD MINERA CERRO VERDE S.A.A., a sociedad anonima abierta listed on
the Lima Stock Exchange organized under the laws of Peru (the "Borrower");

     JAPAN BANK FOR INTERNATIONAL COOPERATION, a Japanese government financial
institution organized under the laws of Japan ("JBIC"), in its capacity as a
Senior Facility Lender;

     SUMITOMO MITSUI BANKING CORPORATION, a stock corporation organized under
the laws of Japan, as lead JBIC arranger and Global Coordinator ("SMBC");

     THE BANK OF TOKYO-MITSUBISHI, LTD., a banking institution organized under
the laws of Japan, as lead JBIC arranger ("BOT-M" and together with SMBC, in
their capacity as lead JBIC arrangers, the "Lead JBIC Arrangers");

     KfW, a public corporation formed under the laws of the Federal Republic of
Germany ("KfW"), in its capacity as a Senior Facility Lender;

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic ("Calyon"), in its
capacity as a Senior Facility Lender, Lead Arranger and Global Coordinator;

     THE ROYAL BANK OF SCOTLAND PLC, a public limited company incorporated under
the laws of Scotland ("RBS"), in its capacity as a Senior Facility Lender and
Lead Arranger;

     THE BANK OF NOVA SCOTIA, a Canadian chartered bank, organized under the
laws of Canada ("Scotia Capital"), in its capacity as a Senior Facility Lender
and Lead Arranger;

     MIZUHO CORPORATE BANK, LTD., a banking institution organized under the laws
of Japan ("Mizuho", and collectively with Calyon, RBS and Scotia Capital, the
"Commercial Banks"), in its capacity as a Senior Facility Lender and Lead
Arranger;

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic, as Administrative
Agent (in such capacity, the "Administrative Agent");

     CITIBANK, N.A., a national banking association organized under the laws of
the United States of America, as Trustee and as Offshore Collateral Agent for
the Senior Lenders (in such capacities, the "Trustee" and the "Offshore
Collateral Agent", respectively); and

     CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
Peru, as Onshore Collateral Agent for the Senior Lenders (in such capacity, the
"Onshore Collateral Agent").

                                    RECITALS

     A. The Borrower owns the Cerro Verde copper mine, including a copper
leaching and solution extraction/electrowinning (SX/EW) operation, located in
the District of Uchumayo and Yarabamba, Province of Arequipa, Republic of Peru
(the "Current Operations");

     B. The board of directors of the Borrower has approved the development of a
primary sulfide ore body beneath the oxide ore body currently in production (the
"Sulfide Project");

     C. On the date hereof, the Borrower is entering into a Master Participation
Agreement among the Borrower, JBIC, SMBC, BOT-M, KfW, Calyon, RBS, Scotia
Capital, Mizuho and the Administrative Agent and the other Financing Documents
to set forth the general financing arrangement for the Sulfide Project under the
Senior Loans;

     D. The Master Participation Agreement contemplates that the Borrower shall
have the rights to issue Peruvian Bonds under a Peruvian Bonds Program and that
the Common Representative shall become a party to this Agreement by entering
into, in its capacity as Common Representative, a New Party Accession Agreement
and thereupon the Common Representative and the Peruvian Bondholders shall have
all the rights and obligations of, respectively, the Common Representative and
the Peruvian Bondholders under this Agreement;

     E. The Borrower proposes to secure the Senior Loans to be made available
pursuant to the MPA and the Senior Loan Documents by pledging the Collateral
pursuant to the terms of this Agreement as well as the terms of the other
Security Documents;

     F. The Senior Lenders wish that the Trustee open and maintain an account
denominated in Dollars with Citibank in New York, NY, United States for the
benefit of the Senior Lenders and the Borrower, into which certain payments will
be deposited in accordance with the terms hereof;

     G. The Senior Lenders wish that the Borrower open and maintain (i) an
account denominated in Nuevos Soles and an account denominated in Dollars with
Citibank del Peru S.A. in Peru and (ii) an account denominated in Nuevos Soles
and an account denominated in Dollars with Banco Credito del Peru, in Peru, into
which certain payment will be deposited in accordance with the terms hereof;

     H. The Borrower and the Senior Lenders wish to govern the allocation of the
proceeds to be distributed from each account established pursuant to this
Agreement in accordance with the terms hereof; and

     I. Each of the Trustee, the Offshore Collateral Agent, the Onshore
Collateral Agent, and the Administrative Agent, wishes to accept its appointment
to perform the services contemplated by this Agreement.

     NOW, THEREFORE, in consideration of the agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower, each of the Lead JBIC Arrangers,
each of the Senior Facility


                                        2

Lenders, the Trustee, the Offshore Collateral Agent, the Onshore Collateral
Agent and the Administrative Agent (each an "MSA Party" and collectively, the
"MSA Parties", which term shall include the Common Representative after the
Common Representative has become a party to this Agreement in accordance with
Section 9.01(a) and any Replacement Lender or Bridge Loan Provider after such
Replacement Lender or Bridge Loan Provider has become a party to this Agreement
in accordance with Section 9.01(b)) agree as follows.

                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to this Agreement.

     1.02 Interpretation. In this Agreement and in the Appendices hereto, except
to the extent that the context otherwise requires:

          (a) the Table of Contents, Articles and Section headings are for
     convenience of reference only and shall not affect the interpretation of
     this Agreement;

          (b) unless otherwise specified, references to Articles, Sections,
     clauses, Schedules, Exhibits and Appendices are references to Articles,
     Sections, clauses, Schedules and Exhibits of, and Appendices to, this
     Agreement;

          (c) references to any document or agreement, including this Agreement,
     shall be deemed to include references to such document or agreement as
     amended, supplemented or replaced and in effect from time to time in
     accordance with its terms and subject to compliance with the requirements
     set forth herein and therein;

          (d) references to any party to this Agreement or any other document or
     agreement or to any other Person shall include its successors and permitted
     assigns;

          (e) when used in this Agreement, the words "including", "includes" and
     "include" shall be deemed to be followed in each instance by the words
     "without limitation";

          (f) when used in this Agreement, the words "herein", "hereby",
     "hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and
     words of similar import, shall refer to this Agreement in its entirety and
     not to any particular section, subsection, paragraph, sub-paragraph, clause
     or other subdivision, exhibit, schedule or appendix of this Agreement; and

          (g) when used herein, the singular shall include the plural, the
     plural shall include the singular and the use of any gender shall include
     all genders, unless the context requires otherwise.


                                        3

                                   ARTICLE II

                                  SENIOR LOANS

     2.01 Secured Obligations Secured Hereby. All Secured Obligations shall be
secured by and entitled to the benefits of this Agreement and the first priority
security interests granted by or pursuant to this Agreement and the Security
Documents.

                                   ARTICLE III

                                   COLLATERAL

     3.01 Mortgages and Pledges at Closing. Except to the extent otherwise
provided in this Article III, on or prior to the Closing Date, the Borrower
shall execute and deliver to the Onshore Collateral Agent for the benefit and on
behalf of the Secured Parties, as security for the Secured Obligations and the
Borrower's other obligations under the Financing Documents, the following
notarized Peruvian public deeds, and the security interests purported to be
granted thereunder shall be registered by the Borrower in each public registry
in Peru in which such registration is necessary to perfect such security
interests:

          (i) a mining mortgage under Article 172 of the Mining Law
     (substantially in the form attached hereto as Exhibit A) (hipoteca minera)
     on all Core Mining Concessions as well as on the mining concessions
     identified as Tiabaya 4 and 10 that shall grant to the Onshore Collateral
     Agent for the benefit and on behalf of the Secured Parties a security
     interest over all buildings and facilities owned by the Borrower and
     located in, and used in connection with the mining activities supported by,
     such concessions, which shall be updated from time to time in accordance
     with Section 3.09(a), provided that no buildings and facilities of the
     Borrower shall be subject to such mining mortgage if it is Excepted
     Property;

          (ii) a mining pledge under Article 178 of the Mining Law
     (substantially in the form attached hereto as Exhibit B) (prenda minera) of
     all equipment, machinery and movable assets owned by the Borrower and used
     in connection with the mining activities of the Borrower supported by the
     Core Mining Concessions as well as by the Mining Concessions identified as
     Tiabaya 4 and Tiabaya 10, which shall be updated from time to time in
     accordance with Section 3.09(a), provided that no equipment, machinery and
     movable assets of the Borrower shall be subject to such mining pledge if it
     is Excepted Property; and

          (iii) a floating mining pledge under Article 178 of the Mining Law
     (substantially in the form attached hereto as Exhibit C) (prenda minera
     flotante) of (x) all minerals extracted from the Core Mining Concessions
     and (y) all Cathode and Concentrate in inventory extracted from the Core
     Mining Concessions, including, without limitation, all such extracted
     minerals, and Cathode and Concentrate in inventory, extracted after the
     creation of the mining pledge, which minerals and Cathode and Concentrate
     in inventory shall be deemed automatically incorporated thereto immediately
     upon their extraction/beneficiation by the Borrower.


                                        4

     3.02 Sales Agreements.

     (a)  Security Interest in Sales Agreements.

          (i) Non-Domestic Sales Agreements. The Borrower hereby grants,
     transfers and assigns to the Offshore Collateral Agent for the benefit and
     on behalf of the Secured Parties, as security for the Secured Obligations
     and the Borrower's other obligations under the Financing Documents, and
     grants a security interest in, all right, title and interest that it now
     has or may hereafter acquire in and to the SMM Concentrate Sales Agreement,
     the PD Concentrate Sales Agreement, the PD Cathodes Sales Agreement, the
     PDC Guarantee and any other Non-Domestic Sales Agreement, all Proceeds and
     all claims resulting from any failure of performance or compliance with any
     of the provisions of any of such Non-Domestic Sales Agreements, together
     with full power and authority to request payment of, enforce, collect,
     receive and give receipt for any and all such payments to the extent
     provided herein (it being understood that the Offshore Collateral Agent
     shall not be entitled to exercise such full power and authority granted
     herein until the Senior Lenders have directed the Administrative Agent to
     authorize the Offshore Collateral Agent to take Borrower Enforcement Action
     with respect to such Non-Domestic Sales Agreements).

          (ii) Domestic Sales Agreements. On or prior to the Closing Date, the
     Borrower shall execute and deliver to the Onshore Collateral Agent for the
     benefit and on behalf of the Secured Parties, as security for the Secured
     Obligations and the Borrower's other obligations under the Financing
     Documents, a master conditional assignment of rights (substantially in the
     form attached hereto as Exhibit D) (cesion condicionada de derechos) under
     Peruvian law of all of the Borrower's credit rights under the Domestic
     Sales Agreements. The conditional assignment of each such Domestic Sales
     Agreement shall become effective upon receipt by the counterparties thereto
     of the notarial notice delivered by the Onshore Collateral Agent (as
     directed by the Administrative Agent, acting upon the instruction of the
     Requisite Lenders in accordance with Sections 5.02 and 5.03) that the
     condition specified in such conditional assignment has been satisfied.

     (b)  Notice.

          (i) Concurrently with or promptly after entering into this Agreement
     in the case of the SMM Concentrate Sales Agreement, the PD Concentrate
     Sales Agreement, the PD Cathodes Sales Agreement or the PDC Guarantee and
     concurrently with or promptly after entering into any other Sales Agreement
     that (x) has a term of three (3) years or more and (y) contemplates annual
     sales of at least 50,000 dry short tons of Cathodes or Concentrate (each, a
     "Notice Sales Agreement"), the Borrower shall give or cause to be given
     written notice to the Buyer (or to PDC in the case of the PDC Guarantee)
     (1) in the case of a Non-Domestic Sales Agreement, of the security interest
     therein granted by subsection (a)(i) above and (2) in the case of a
     Domestic Sales Agreement, of the conditional assignment thereof granted in
     subsection (a)(ii) above. Such notice shall irrevocably instruct such Buyer
     to make or cause to be made all payments due under such Notice Sales
     Agreement to the Proceeds Account (or, in the case of Domestic Sales
     Agreements, to the Onshore Dollars Account).


                                        5

          (ii) In the case of Notice Sales Agreements that are Domestic Sales
     Agreements, the Borrower shall give or cause to be given such notice to the
     applicable Buyer either (x) through notarial notification in Peru in the
     form attached hereto as Exhibit E-1 (a "Notarial Notice"), including an
     indication that the effectiveness of the conditional assignment is
     conditioned upon receipt by the Buyer of the notarial notice delivered by
     the Onshore Collateral Agent (as directed by the Administrative Agent,
     acting upon the instruction of the Requisite Lenders in accordance with
     Sections 5.02 and 5.03) that the condition specified in such conditional
     assignment has been satisfied or (y) through an acknowledgment and consent
     in the form attached hereto as Exhibit E-2 (a "Domestic Buyer's Consent"),
     addressed to the Borrower, to the effect that such Buyer has received
     notice from the Borrower of the conditional assignment of the Notice Sales
     Agreement and that such Buyer will make payments thereunder to the Onshore
     Dollars Account.

          (iii) In the case of Notice Sales Agreements that are Non-Domestic
     Sales Agreements, the Borrower shall obtain from the Buyer under each such
     Notice Sales Agreement an acknowledgment in the form attached hereto as
     Exhibit E-3 (a "Non-Domestic Buyer's Consent"), addressed to the Borrower,
     to the effect that such Buyer has received notice from the Borrower of the
     security interest in the Notice Sales Agreement and that such Buyer will
     make payments thereunder to the Proceeds Account.

          (iv) The parties hereto agree that the notice by the Borrower to the
     Buyer and the acknowledgment and consent by the Buyer to the Borrower and
     the Onshore Collateral Agent or the Offshore Collateral Agent, as the case
     may be, required by this clause (b), may be satisfied as to any applicable
     Notice Sales Agreement by the inclusion of the Buyer's acknowledgment and
     consent in such Notice Sales Agreement.

          (v) Promptly after entering into a Notice Sales Agreement, the
     Borrower shall deliver a copy thereof: (x) to the Offshore Collateral
     Agent, together with the related Non-Domestic Buyer's Consent (once
     obtained), if the Notice Sales Agreement is a Non-Domestic Sales Agreement
     or (y) to the Onshore Collateral Agent with the related Notarial Notice or
     Domestic Buyer's Consent (once obtained), if the Notice Sales Agreement is
     a Domestic Sales Agreement.

     3.03 Rights Under Certain Agreements. The Borrower hereby grants, transfers
and assigns to the Offshore Collateral Agent for the benefit and on behalf of
the Secured Parties, as security for the Secured Obligations and the Borrower's
other obligations under the Financing Documents, and grants a security interest
in, all of its right, title and interest in and to (a) the Construction
Agreements, (b) the Operator's Agreement, (c) the Power Supply Agreements, (d)
the Port Services Agreement, (e) the Shareholders Agreement and (f) the
Transportation Agreements (collectively, the "Assigned Agreements") and all
claims resulting from any failure of performance or compliance with any of the
provisions of the such Assigned Agreements, together with full power and
authority, in the name of the Borrower or otherwise, to enforce such Assigned
Agreements against the counterparties thereto. On or prior to the Closing Date,
the Borrower shall give or cause to be given written notice of the security
interest in the Assigned Agreements created hereunder to each of the
counterparties to such Assigned Agreements and shall obtain from each such
counterparty, and deliver to the Offshore Collateral Agent, a consent


                                        6

to and acknowledgement of the security interest granted in this Section 3.03 in
the applicable Assigned Agreement, addressed to the Borrower.

     3.04 Water Rights.

     (a) Borrower shall not grant or suffer to exist any security interest in
any of its water rights, except in accordance with clause (b) below.

     (b) If, after the date hereof, a change in Peruvian law provides for the
free transferability of water rights, the Borrower shall promptly or upon the
request of the Administrative Agent (acting pursuant to instruction from the
Majority Lenders) execute and deliver a conditional assignment of its water
rights (cesion condicionada de derechos) to the Onshore Collateral Agent for the
benefit and on behalf of the Secured Parties, as security for the Secured
Obligations and the Borrower's other obligations under the Financing Documents,
and shall take any other action which may be required pursuant to such
change-in-law to execute and deliver such conditional assignment in a form
reasonably agreed to by the Borrower and the Administrative Agent (acting
pursuant to the instruction of the Majority Lenders) and the Onshore Collateral
Agent, provided that (i) the effectiveness of such assignment shall be
conditioned upon receipt by the relevant Governmental Authority of a notarial
notice delivered by the Onshore Collateral Agent (as directed by the
Administrative Agent, acting upon the instruction of the Requisite Lenders in
accordance with Sections 5.02 and 5.03) that the condition specified in such
conditional assignment has been satisfied and (ii) the Borrower shall not, and
the Onshore Collateral Agent and Senior Lenders shall not, be required to
request any Peruvian Governmental Authority's consent to such assignment prior
to it being effective (provided that a notarial notice of the execution and
delivery of the conditional assignment shall be delivered to the relevant
Governmental Authority at the time of such execution and delivery if the change
in law requires the delivery of such a notarial notice at the time a conditional
assignment is entered into).

     3.05 Interest in Accounts.

     (a) Interest in Proceeds Account. The Borrower hereby grants, transfers and
assigns to the Offshore Collateral Agent for the benefit and on behalf of the
Secured Parties, as security for the Secured Obligations and the Borrower's
other obligations under the Financing Documents, and grants a security interest
in, all of the Borrower's right, title and interest, if any, which it now has,
or which may hereafter arise, in and to the Proceeds Account, to the money and
investments contained therein from time to time and to all instruments,
certificates and notes in respect of Permitted Investments held or maintained
from time to time therein. Funds and investments in the Proceeds Account shall
constitute trust funds held by the Offshore Collateral Agent for the benefit and
on behalf of the Secured Parties for application as provided herein.
Accordingly, the Offshore Collateral Agent shall apply such funds and
investments strictly in accordance with the terms of this Agreement.

     (b) Interest in Onshore Accounts.

          (i) The Borrower agrees (A) on or prior to the Closing Date, to
     execute with the Depository Bank and with the Onshore Bank a Contrato de
     Cuenta Escrow


                                        7

     (substantially in the form attached hereto as Exhibit F) evidencing that,
     with respect to the Onshore Accounts opened in the name of the Borrower
     pursuant to Section 4.01 hereof, the Borrower has granted sufficient
     irrevocable instructions to the Depository Bank and the Onshore Bank to
     receive and follow instructions from the Onshore Collateral Agent in
     accordance with the terms set forth herein and in the Contrato de Cuenta
     Escrow, and (B) within 90 days following the Closing Date, to transfer all
     funds on deposit in any account of the Borrower held in Peru as of such
     date to the Onshore Accounts. Funds and investments in the Onshore Accounts
     shall be applied strictly in accordance with the terms of Sections 4.11,
     4.12, 4.13, 4.14, 4.17 and 4.18 of this Agreement, as the case may be, and
     the Contrato de Cuenta Escrow.

          (ii) Funds held in the Onshore Accounts may be invested by the
     Borrower in accordance with the terms set forth herein and in the Contrato
     de Cuenta Escrow.

     3.06 Insurance and Insurance Proceeds. Each policy of insurance or
reinsurance required to be maintained pursuant to Appendix II to the MPA (or, if
applicable, each global property insurance policy maintained by PDC or any of
its Affiliates in satisfaction of the insurance requirements set forth in
Sections 8.01 and 8.02 of the MPA) will name the Borrower as the named insured
and will be endorsed as contemplated in Appendix II of the MPA (but with respect
to any global property insurance policy maintained by PDC or any of its
Affiliates only in so far as such policy relates to the Borrower). Any claims
payments made under such policy(s) will be made as contemplated in Appendix II
of the MPA.

     3.07 SMCV Shares. On or prior to the Closing Date, the Borrower shall cause
each of the Shareholders to execute and deliver to the Onshore Collateral Agent
for the benefit and on behalf of the Secured Parties, as security for the
Secured Obligations and the Borrower's other obligations under the Financing
Documents, a notarized public deed constituting a pledge of the SMCV Shares
(prenda) (substantially in the form attached hereto as Exhibit G) (the "Sponsors
Share Pledge"). On or prior to the Closing Date, the Borrower shall cause the
Sponsors Share Pledge executed by each Shareholder to be (a) registered in the
share registry of the Borrower (matricula de acciones) for SMCV Shares that are
registered in such registry or (b) recorded with CAVALI ICLV S.A. for SMCV
Shares that are recorded in electronic form with CAVALI ICLV S.A.

     3.08 Subordinated Loans and Subordinated Notes. Borrower shall cause each
of the Parent Companies and their respective Affiliates to grant, transfer and
assign to the Offshore Collateral Agent for the benefit and on behalf of the
Secured Parties, as security for the Secured Obligations and the Borrower's
other obligations under the Financing Documents, and grant a security interest
in, all right, title and interest that each such Parent Company or Affiliate of
such Parent Company may at any time hereafter acquire in and to any Subordinated
Loans and Subordinated Notes at any time payable to or owned or held by it and
to any Subordinated Loan Agreement and Subordinated Notes to which it is a
party, and all claims resulting from any failure of performance or compliance
with such Subordinated Loans, Subordinated Loan Agreements and Subordinated
Notes by the Borrower, together with full power and authority, in its own name
or otherwise, to enforce such Subordinated Loans, Subordinated Loan Agreements
and Subordinated Notes against the Borrower. Subordinated Notes that are
governed by Peruvian law will be endorsed in guarantee (endosada en garantia) to
the Senior Lenders.


                                        8

     3.09 Pledge of Project Property at Other Times. Except to the extent
otherwise provided in this Article III or with respect to the Proceeds Account
and the Onshore Accounts, the Borrower agrees to:

     (a) execute and deliver to the Onshore Collateral Agent for the benefit and
on behalf of the Secured Parties, as security for the Secured Obligations and
for the Borrower's other obligations under the Financing Documents, notarized
Peruvian public deeds:

          (i) incorporating into the mining mortgage described in Section
     3.01(i) any and all Peruvian mining concessions necessary to operate the
     Current Operation or the Sulfide Project which the Borrower may acquire
     from time to time after the date of this Agreement promptly following the
     acquisition thereof;

          (ii) incorporating into the mining mortgage described in Section
     3.01(i) any and all buildings and facilities located in and used in
     connection with the mining activities supported by the concessions subject
     to the mining mortgage which the Borrower may acquire from time to time
     after the date of the mining mortgage, (x) prior to the Completion Release
     Date, on the date that is 6 months following the date of this Agreement and
     every six months thereafter, or upon a suspension under Section 5.01 of the
     Completion Guarantee, (y) on or prior to (but not more than 3 months prior
     to) the achievement of Full Completion or Partial Completion, as the case
     may be, and (z) after the achievement of Full Completion or Partial
     Completion, as the case may be, annually on the anniversary date of the
     Completion Release Date; and

          (iii) incorporating into the mining pledge described in Section
     3.01(ii) any and all equipment, machinery and movable assets owned by the
     Borrower and used in connection with the mining activities of the Borrower
     supported by the Core Mining Concessions as well as by the Mining
     Concessions identified as Tiabaya 4 and Tiabaya 10, which the Borrower may
     acquire from time to time after the date of the mining pledge, (x) prior to
     the Completion Release Date, on the date that is 6 months following the
     date of this Agreement and every six months thereafter, or upon a
     suspension under Section 5.01 of the Completion Guarantee, (y) on or prior
     to (but not more than 3 months prior to) the achievement of Full Completion
     or Partial Completion, as the case may be, and (z) after the achievement of
     Full Completion or Partial Completion, as the case may be, annually on the
     anniversary date of the Completion Release Date.

     (b) execute and deliver to the Onshore Collateral Agent for the benefit and
on behalf of the Secured Parties, as security for the Secured Obligations and
for the Borrower's other obligations under the Financing Documents,

          (i) a civil mortgage (substantially in the form attached hereto as
     Exhibit H) (hipoteca) on all real property owned by the Borrower that is
     not included in the mining mortgage referred to in Section 3.01(i) promptly
     following such time as the book value of all such real property (excluding
     Excepted Property) exceeds US$10 million, provided that no real property of
     the Borrower shall be subject to such civil mortgage if it is Excepted
     Property; and


                                        9

          (ii) an industrial pledge (equipment, machinery and movable assets)
     (substantially in the form attached hereto as Exhibit I) (prenda
     industrial) on any and all equipment, machinery and movable assets which
     are not otherwise included under the mining pledge contemplated in Section
     3.01(ii) which the Borrower may acquire from time to time after the date of
     this Agreement, promptly following such time as the book value of all such
     equipment, machinery and movable assets (excluding Excepted Property)
     exceeds US$10 million, provided that no equipment, machinery and movable
     assets of the Borrower shall be subject to such industrial pledge if it is
     Excepted Property.

     (c) For the incorporation of the assets in the Collateral as described in
the foregoing Section 3.09, the Borrower shall (x) file the relevant notarized
Peruvian public deeds with the corresponding Registry Office promptly, but in
any event within 10 Business Days, following the execution of the relevant
notarized Peruvian public deed by all parties thereto and (y) obtain the
registration thereof in the corresponding Registry Office within 90 days
following the execution, provided that (i) so long as the Borrower is exercising
commercially reasonable efforts to obtain the registration, such 90 days period
shall be extended to 180 days and (ii) if the registration has not been obtained
after 60 days following the execution of the relevant notarized Peruvian public
deed, the Majority Lenders may instruct the Onshore Collateral Agent to proceed
to obtain such registration pursuant to the power of attorney granted by the
Borrower as contemplated in Section 3.10(B)(d).

     3.10(A) Filings and Registration Generally.

     (a) The mining mortgage described in Section 3.01(i) shall be executed in
the form of a notarized public deed (escritura publica) and shall be filed and
registered by the Borrower in the Book of Mining Rights (Libro de Derechos
Mineros) of the Registry Office of Arequipa (Oficina Registral de Arequipa) in
the entry card of each of the Core Mining Concessions subject matter of the
mining mortgage.

     (b) The mining pledge (equipment, machinery and movable assets) described
in Section 3.01(ii) shall be executed in the form of a notarized public deed
(escritura publica) and shall be filed and registered by the Borrower in the
Book of Mining Pledge (Libro de Prenda Minera) of the Registry Office of
Arequipa (Oficina Registral de Arequipa).

     (c) The mining pledge (minerals and Cathode and Concentrate in inventory)
described in Section 3.01(iii) shall be executed in the form of a notarized
public deed (escritura publica) and shall be filed and registered by the
Borrower in the Book of Mining Pledge (Libro de Prenda Minera) of the Registry
Office of Arequipa (Oficina Registral de Arequipa).

     (d) The conditional assignment of rights for Domestic Sales Agreements
(cesion condicionada de derechos) described in Section 3.02(a)(ii) shall be
executed in the form of a notarized public deed (escritura publica). No
additional steps shall be required with respect to Domestic Sales Agreements
that are not Notice Sales Agreements. With respect to Domestic Sales Agreements
that are Notice Sales Agreements, the Borrower shall give notice of such
assignment to the applicable Buyer as contemplated in Section 3.02(b)(ii).


                                       10

     (e) Each Contrato de Cuenta Escrow with respect to the Onshore Accounts
described in Section 3.05(b) shall be executed in the form of a private
instrument (contrato privado). No filing or registration shall be required.

     (f) The Sponsors Share Pledge described in Section 3.07 shall be executed
in the form of a notarized public deed (escritura publica) and (i) filed and
registered in the share registry of the Borrower (matricula de acciones) for
SMCV Shares that are registered in such registry or (ii) recorded with CAVALI
ICLV S.A. for SMCV Shares that are recorded in electronic form with CAVALI ICLV
S.A.

     3.10(B) Perfection and Maintenance of Security Interests.

     (a) Except to the extent otherwise provided in this Agreement, at any time
and from time to time, upon demand of the Onshore Collateral Agent or Offshore
Collateral Agent (for the benefit and on behalf of the Secured Parties), the
Borrower shall give, execute, file or record any notice, financing statement,
continuation statement, public deed, instrument, document or agreement and use
its reasonable efforts to obtain such governmental approvals, consents, licenses
or authorizations that the Onshore Collateral Agent or the Offshore Collateral
Agent may consider reasonably necessary or desirable, and shall take all other
reasonable action as required or advisable to create, preserve, continue,
perfect or validate any security interest granted by it under the Security
Documents or hereunder or pursuant hereto in the Collateral or to enable the
Onshore Collateral Agent or the Offshore Collateral Agent to exercise or enforce
its rights hereunder or under the Security Documents with respect to such
security interest.

     (b) Without limiting the generality of the foregoing, except to the extent
otherwise provided in this Agreement, the Onshore Collateral Agent or the
Offshore Collateral Agent, on behalf of each Senior Lender, is authorized to
file or cause to be filed under the Uniform Commercial Code of any state or
district of the United States of America or under other applicable law financing
statements, continuation statements or other documents relating to the
Collateral, and each of the Onshore Collateral Agent or the Offshore Collateral
Agent, on behalf of each Senior Lender, is authorized to execute and file or
cause to be executed and filed public deeds or other documents under the laws of
Peru as necessary to preserve a security interest in the Collateral, in each
case without the signature of the Borrower or any Shareholder (to the extent
permitted by applicable law). None of the Onshore Collateral Agent, the Offshore
Collateral Agent, the Administrative Agent or the Senior Lenders have any
responsibility for the creation, perfection, validity or enforceability of any
security interest created or intended to be created hereby or pursuant hereto or
for the maintenance or perfection of any such security interest, provided,
however, that the Onshore Collateral Agent or the Offshore Collateral Agent, as
applicable, shall execute all public deeds or other documents as requested by
the Administrative Agent to duly create and register security interests in
accordance with this Article III. Each of the Onshore Collateral Agent or the
Offshore Collateral Agent shall notify the Borrower following the taking by it
of such respective action.

     (c) The Borrower shall take no action inconsistent with this Agreement
which would impair or render ineffective or adversely affect the perfection or
the priority of any of the security interests granted by it in, or pursuant to,
this Agreement or the other Security Documents.


                                       11

     (d) On or prior to the Closing Date, the Borrower agrees to execute and
deliver to the Onshore Collateral Agent and the Offshore Collateral Agent, for
the benefit and on behalf of each Senior Lender, and to register in the Registro
de Personas Juridicas and in any other public registry in Peru in which such
registration is necessary, a notarized Peruvian public deed, in form and
substance reasonably satisfactory to the Administrative Agent, constituting
irrevocable powers of attorney granting the Onshore Collateral Agent and the
Offshore Collateral Agent, as the Borrower's attorney-in-fact, the power and
right, in its name or on its behalf, without notice or assent, to the extent
permitted by applicable law, to take any action and execute any instruments, in
each case consistent with this Agreement, which the Onshore Collateral Agent,
the Offshore Collateral Agent or any Senior Lender may deem reasonably necessary
or advisable to create, preserve, continue, perfect or validate any security
interest granted or purported to be granted by it under or pursuant to this
Agreement or any Security Document, which power of attorney and registration
thereof shall be renewed from time to time as needed to remain effective. Such
powers of attorney shall not be used for the incorporation of assets in the
Collateral as described in Section 3.09, except if the relevant notarized
Peruvian public deeds have not been registered in the corresponding Registry
Office within 60 days following the execution thereof.

     (e) Any Security Document governed by the laws of Peru referred to in, and
required to be delivered pursuant to, this Article III may be delivered to the
Onshore Collateral Agent or to the Offshore Collateral Agent, as applicable.

     (f) All references in this Agreement and in documents that refer to this
Agreement for defined terms to "security" or "security interests" shall be
deemed to include the conditional assignments referred to in this Article III,
whether or not such conditional assignments now or hereafter constitute security
interests under the laws of Peru, and any requirement for perfection of
conditional assignments under this Article III on or prior to the Closing Date
shall be deemed accomplished by appropriate notice of the assignment effected
thereby to the counterparty or obligor of the rights assigned thereunder.

     3.10 Rights in Collateral Prior to Enforcement Action.

     (a) Notwithstanding the security interests created and to be created
pursuant to this Agreement, unless otherwise provided in this Agreement, or
unless the Senior Lenders have directed the Administrative Agent to authorize
the Offshore Collateral Agent and the Onshore Collateral Agent to take Borrower
Enforcement Action with respect to the Collateral, the Borrower and the
Shareholders shall retain and be entitled to exercise all of their respective
rights relating to such Collateral, subject to the provisions of this Agreement,
the MPA and the Senior Loan Documents, including, without limitation, as
follows: (i) possessing and using the Project Property, receiving the revenues
and profits to be derived therefrom, and altering or disposing of any part
thereof, (ii) exercising all rights relating to the Sales Agreements, including,
without limitation, amending the Sales Agreements and instituting and settling
proceedings to enforce the Borrower's rights thereunder, (iii) renewing,
amending and canceling Insurance policies, making claims and instituting and
settling proceedings against insurers thereunder, (iv) exercising all rights
relating to the Assigned Agreements and the Notice Sales Agreements, (v)
possessing and transferring (in accordance with the Shareholders Agreement) any
SMCV Shares, exercising all rights thereunder and receiving the profits to be
derived


                                       12

therefrom, (vi) receiving payments of principal and interest on any Subordinated
Loans and Subordinated Notes, when payable thereunder, amending any Subordinated
Loan Agreements and Subordinated Notes and assigning such Subordinated Loan
Agreements and Subordinated Notes, and (vii) amending any of the Assigned
Agreements, making waivers and elections thereunder and instituting and settling
proceedings for the enforcement of rights thereunder; provided that in respect
of the Onshore Accounts and any funds and investments held therein, the Borrower
shall be entitled only to withdraw, transfer, apply, invest or otherwise deal
with such funds and investments in accordance with the provisions of this
Agreement and the Contrato de Cuenta Escrow, whether or not the Borrower has
received notice that the Senior Lenders have elected to take Borrower
Enforcement Action pursuant to the terms of this Agreement.

     (b) Unless the Senior Lenders have directed the Administrative Agent to
instruct the Offshore Collateral Agent and the Onshore Collateral Agent to take
Borrower Enforcement Action with respect to such Collateral, each Senior Lender
or its Peruvian attorney-in-fact, the Offshore Collateral Agent and the Onshore
Collateral Agent (each for the benefit of the Senior Lenders), shall, at the
request and cost of the Borrower and the Shareholders, as the case may be,
execute such documents and take such action and do such things as may be
necessary or convenient to enable such grantor of the security interest in such
Collateral to exercise the rights retained by them in such Collateral, and none
of the Senior Lenders or their respective attorneys-in-fact, the Offshore
Collateral Agent, the Onshore Collateral Agent nor any other Appointed Party
shall take any action prior to the taking of such Borrower Enforcement Action
(other than any actions expressly permitted by this Agreement to be taken prior
to the taking of such Borrower Enforcement Action) that would unreasonably
interfere with actions permitted hereunder in respect of such Collateral by the
grantor of the security interest in such Collateral.

     3.11 Release of Security Interest.

     (a) The Administrative Agent shall notify, in writing, the Onshore
Collateral Agent if prior to the occurrence of the Closing Date and prior to the
issuance of any Peruvian Bonds, the Borrower terminates and reduces all
Commitments to zero.

     (b) Upon receipt of such notice, to the extent any of the security
interests created under Peruvian law as contemplated in this Article III are
created prior to the Closing Date, the Onshore Collateral Agent shall release
all such security interests, and take all actions necessary to formalize such
release.

     3.12 Foreclosure. Without prejudice to mandatory provisions under
applicable Peruvian law with respect to the Onshore Collateral Agent,

     (a) After default, a Secured Party may sell, lease, license or otherwise
dispose of any or all of the Collateral in its present condition or following
any commercially reasonable preparation or processing.

     (b) Every aspect of a disposition of Collateral, including the method,
manner, time, place and other terms, must be commercially reasonable. If
commercially reasonable, a Secured Party may dispose of Collateral by public or
private proceedings, by one or more contracts, as a unit or in parcels, and at
any time and on any terms.


                                       13

     (c) A Secured Party may purchase Collateral (i) at a public disposition, or
(ii) at a private disposition only if the Collateral is of a kind that is
customarily sold on a recognized market or the subject of widely distributed
standard practice quotations.

     (d) Upon request from the Borrower, a sale of the SMCV Shares pledged to
the Secured Parties shall be effected through one or more stock exchange
transactions unless such a sale through a stock exchange transaction would
impair the ability of the Secured Parties to realize the value of the sold
shares.

     (e) Prior to initiating a foreclosure proceeding under any of the Security
Documents, the Onshore Collateral Agent or the Offshore Collateral Agent, as the
case may be, shall deliver a written certificate executed by an Authorized
Officer of the Administrative Agent, indicating that the Requisite Lenders have
delivered a Borrower Enforcement Direction pursuant to the terms of this
Agreement.

                                   ARTICLE IV

                             SPECIAL ACCOUNTS SYSTEM

     4.01 Creation of the Accounts.

     (a) On or prior to the Closing Date:

          (i) the Trustee shall establish, and thereafter the Trustee shall
     maintain, in its capacity as trustee, a U.S.$-denominated non-interest
     bearing trust account (the "Proceeds Account"), which shall be opened in
     the name of the Trustee in New York, NY and which shall be divided in
     sub-accounts as contemplated in paragraph (b) below;

          (ii) the Borrower shall open a U.S.$-denominated account (the "Onshore
     Dollars Account"), which shall be opened in the name of the Borrower with
     the Onshore Collateral Agent (the "Depository Bank") and into which amounts
     shall be deposited in accordance with Section 4.11(a) and from which
     amounts shall be withdrawn in accordance with Section 4.11(b);

          (iii) the Borrower shall open an additional U.S.$-denominated account
     (the "Operating Onshore Dollars Account"), which shall be opened in the
     name of the Borrower at Banco de Credito del Peru (the "Onshore Bank") and
     into which amounts shall be deposited in accordance with Section 4.12(a)
     and from which amounts shall be withdrawn in accordance with Section
     4.12(b);

          (iv) the Borrower shall open a Nuevos Soles denominated account (the
     "Onshore Nuevos Soles Account"), which shall be opened in the name of the
     Borrower at the Depository Bank and into which amounts shall be deposited
     in accordance with Section 4.13(a) and from which amounts shall be
     withdrawn in accordance with Section 4.13(b); and

          (v) the Borrower shall open an additional Nuevos Soles denominated
     account (the "Operating Onshore Nuevos Soles Account"), which shall be
     opened in the name of


                                       14

     the Borrower at the Onshore Bank and into which amounts shall be deposited
     in accordance with Section 4.13(a) and from which amounts shall be
     withdrawn in accordance with Section 4.13(b).

     (b) The Proceeds Account shall include the following sub-accounts (the
"Sub-Accounts"):

          (i)  a "Senior Debt Accumulation Sub-Account";

          (ii) a "Senior Debt Service Reserve Sub-Account";

          (iii) an "Extraordinary Major Maintenance Reserve Sub-Account";

          (iv) a "Tax Contingency Reserve Sub-Account";

          (v)  a "Restricted Payment Sub-Account";

     (c) The Extraordinary Major Maintenance Reserve Sub-Account shall be
divided further to include a "Power Generator Reserve Sub-Account".

     (d) Unless otherwise specified, all references herein to any Account
(including for purposes of clause (f) below) shall be to such Account together
with all Sub-Accounts thereof then constituted and, except as expressly
provided, such Sub-Accounts shall be subject to the same restrictions and
limitations as the Account to which they relate.

     (e) All moneys held in the Proceeds Account or any sub-account thereof
shall be trust funds held by the Trustee in New York, New York for the benefit
of the Senior Lenders and the Borrower for the sole purpose of making payments
therefrom in accordance with this Agreement and only the Trustee shall have the
right to make withdrawals and payments from such accounts, upon instruction or
direction, in accordance with this Agreement.

     (f) (i) The Proceeds Account shall be a "securities account" (as such term
is defined in Section 8-501(a) of the UCC). The Proceeds Account shall consist
of segregated securities accounts, denominated in Dollars and separately
established and maintained at a branch of Citibank, N.A., in New York by the
Trustee. The Trustee shall act as "securities intermediary" (as such term is
defined in Section 8-102(a)(14) of the UCC) with respect to the Proceeds
Account.

          (ii) The Proceeds Account (including all security entitlements
     relating thereto) shall be governed by the law of the State of New York.
     Regardless of any provision in any other agreement, for purposes of the
     UCC, the "securities intermediary's jurisdiction" with respect to the
     Proceeds Account for the purposes of Section 8-110(e) of the UCC is, and
     will continue to be for so long as this Agreement is in effect, the State
     of New York.

          (iii) The Trustee hereby agrees and represents that (A) the Trustee
     for the benefit of the Lenders will be the sole "entitlement holder"
     (within the meaning of Section 8-102(a)(7) of the UCC) in respect of the
     "financial assets" (within the meaning


                                       15

     of Section 8-102(a)(9) of the UCC) credited to the Proceeds Account and any
     instruction or direction from the Trustee with respect to the Proceeds
     Account as described in this Article IV or elsewhere in this Agreement
     shall constitute an "entitlement order" (as defined in Section 8-102(a)(8)
     of the UCC), (B) all property delivered to the Trustee (in such capacity)
     pursuant to this Agreement or any other Financing Document for deposit in
     each of the Proceeds Account will be held by the Trustee and promptly
     credited to the Proceeds Account by an appropriate entry in its records in
     accordance with this Agreement, (C) all "financial assets" (within the
     meaning of Section 8-102(a)(9) of the UCC) in registered form or payable to
     or to the order of and credited to the Proceeds Account shall be registered
     in the name of, payable to or to the order of, or indorsed to, the Trustee
     or in blank, or credited to another securities account maintained in the
     name of the Trustee, and in no case will any financial asset credited to
     any such Proceeds Account be registered in the name of, payable to or to
     the order of, or indorsed to, the Borrower except to the extent the
     foregoing has been subsequently indorsed by the Borrower to the Trustee or
     in blank, and (D) each item of property (including any security, instrument
     or obligation, share, participation, interest, or other property
     whatsoever) credited to the Proceeds Account shall be a "financial asset"
     within the meaning of Section 8-102(a)(9) of the UCC and shall be treated
     as a financial asset and the right to them shall constitute a "security
     entitlement" (as defined under Section 8-102(17) of the UCC).

          (iv) The Trustee does not know (without independent investigation) of
     any claim to or interest in the Proceeds Account, except for the claims and
     interests of the parties referred to in this Agreement. The Trustee will
     not enter into any other agreement with any person relating to any
     entitlement order with respect to the Proceeds Account.

          (v) The Trustee, in its capacity as securities intermediary, (A)
     subordinates in favor of the other Secured Parties any security interest,
     lien, or right of recoupment or setoff it may have, now or in the future,
     against the Proceeds Account and (B) agrees that it will not exercise any
     right in respect of such security interest or lien or any such right of
     recoupment or setoff for so long as this Agreement remains in effect.

     (g) Within 90 days from the Closing Date, the Borrower shall transfer all
funds standing to the credit of any of its accounts to the Proceeds Account, the
Onshore Dollars Account, the Operating Onshore Dollars Account, the Onshore
Nuevos Soles Account, and/or the Operating Onshore Nuevos Soles Account,
provided that the aggregate balance standing to the credit of the Onshore
Dollars Account, the Operating Onshore Dollars Account, the Onshore Nuevos Soles
Account and the Operating Onshore Nuevos Soles Account (together the "Onshore
Accounts") shall not exceed the sum of estimated Operating Costs over the next
succeeding 60 days and the amount of estimated Onshore Project Costs over the
next succeeding 90 days.


                                       16

     4.02 Transfers to the Proceeds Account.

     (a)  Deposits in the Proceeds Account:

          (i) Funds standing to the credit of the Onshore Accounts may be
     transferred to the Proceeds Account pursuant to Sections 4.11(b)(i),
     4.12(b)(i), 4.13(b)(i), and 4.14(b)(i) or shall be transferred to the
     Proceeds Account pursuant to Section 4.15.

          (ii) Funds standing to the credit of the Senior Debt Service Reserve
     Sub-Account, the Extraordinary Major Maintenance Reserve Sub-Account, the
     Tax Contingency Reserve Sub-Account, the Power Generator Reserve
     Sub-Account and the Restricted Payment Sub-Account may be transferred to
     the Proceeds Account pursuant to, respectively, Section 4.05(i), Section,
     4.06(i), Section 4.07(i), Section 4.08(i) and Section 4.09(i)(D).

          (iii) The Borrower shall, as soon as practicable but no later than 90
     days after the Closing Date, instruct each Buyer, each insurer and each
     other Person from whom the Borrower is entitled to receive any Proceeds
     (other than Proceeds from Domestic Sales), insurance proceeds, proceeds of
     Permitted Indebtedness (other than the Senior Loans), Expropriation
     Compensation, damages, compensation or revenues of any kind, after the
     Closing Date (and subject to the provisions of Article VIII of the MPA in
     the case of insurance proceeds), to remit the same to the Trustee for
     deposit into the Proceeds Account and if, notwithstanding such
     instructions, any such payment should be deposited into any other account
     or paid to any other Person, the Borrower shall promptly deliver such
     payment (or cause it to be delivered) to the Trustee for deposit into the
     Proceeds Account.

          (iv) In connection with each issuance of Peruvian Bonds, the Borrower
     shall cause the proceeds of such issuance to be deposited in the Proceeds
     Account. The Borrower shall notify the Trustee immediately when the
     proceeds from the Peruvian Bonds are to be remitted to the Proceeds
     Account.

     4.03 Transfers from the Proceeds Account.

     (a) On any NY Business Day, the Trustee shall apply the balance standing to
the credit of the Proceeds Account as promptly as practicable, in the following
order of priority (based upon information contained within the Withdrawal
Certificate):

          (i) upon request from the Borrower, to transfer funds credited to the
     Proceeds Account to the Onshore Dollars Account and/or the Onshore Nuevos
     Soles Account in an amount up to the difference if positive between (x) the
     amount of estimated Operating Costs of Borrower over the next succeeding 60
     days (and the amount of estimated Onshore Project Costs over the next
     succeeding 90 days (as reasonably determined by the Borrower or, if the
     Borrower fails to do so within five (5) Business Days after a request
     thereof, by the Administrative Agent) and (y) the aggregate balance
     standing to the credit of the Onshore Accounts;


                                       17

          (ii) upon request from the Borrower, to make any payment on account of
     Operating Costs of Borrower or on account of Project Costs of Borrower;

          (iii) upon request from the Borrower or, if the Borrower fails to do
     so, within five (5) Business Days after request thereof by the
     Administrative Agent to make any mandatory prepayment of Senior Facility
     Loans as and when such a mandatory prepayment is required pursuant to the
     terms of the MPA;

          (iv) upon request from the Borrower to make any voluntary prepayment
     of the Senior Loans or Senior Facility Loans;

          (v) to the extent funds standing to the credit of the Proceeds Account
     represent the proceeds of the issuance of the Peruvian Bonds, the Trustee
     shall, upon request of the Borrower, transfer such funds to prepay the
     Outstanding Stand-By Amount of the Commercial Banks in whole or in part
     together with accrued and unpaid interest on the amount so prepaid;

          (vi) if 90 days after the making of the final Advance, proceeds
     thereof have not been fully applied to the payment of Project Costs, upon
     request of the Borrower or, if the Borrower fails to do so, within five (5)
     Business Days after request thereof by the Administrative Agent, the
     Trustee shall apply such remaining proceeds to prepay the Outstanding
     Advance Amount of the Senior Facility Lenders as contemplated in Section
     3.06(d) of the MPA;

          (vii) upon request from the Borrower, to the extent any Senior Debt
     Service Reserve Deficiency (as reasonably determined by the Borrower or, if
     the Borrower fails to do so within five (5) Business Days after a request
     thereof, by the Administrative Agent) exists, to credit funds to the Senior
     Debt Service Reserve Sub-Account by debiting the Proceeds Account in an
     amount equal to such Senior Debt Service Reserve Deficiency;

          (viii) upon request from the Borrower, to the extent any Extraordinary
     Major Maintenance Reserve Deficiency (as reasonably determined by the
     Borrower or, if the Borrower fails to do so within five (5) Business Days
     after a request thereof, by the Administrative Agent) exists, to credit
     funds to the Extraordinary Major Maintenance Reserve Sub-Account by
     debiting the Proceeds Account in an amount equal to such Extraordinary
     Major Maintenance Reserve Deficiency;

          (ix) upon request from the Borrower, to the extent any Tax Contingency
     Reserve Deficiency (as reasonably determined by the Borrower or, if the
     Borrower fails to do so within five (5) Business Days after a request
     thereof, by the Administrative Agent) exists, to credit funds to the Tax
     Contingency Reserve Sub-Account by debiting the Proceeds Account in an
     amount equal to such Tax Contingency Reserve Deficiency;

          (x) upon request from the Borrower, to the extent any Power Generator
     Reserve Deficiency (as reasonably determined by the Borrower or, if the
     Borrower fails to do so within 5 Business Days after a request thereof, by
     the Administrative Agent) exists, to credit funds to the Power Generator
     Reserve Sub-Account by transferring funds


                                       18

     standing to the credit of the Proceeds Account in an amount equal to such
     Power Generator Reserve Deficiency to the Extraordinary Major Maintenance
     Reserve Sub-Account for further credit to the Power Generator Reserve
     Sub-Account; and

          (xi) upon request from the Borrower, to credit funds to the Restricted
     Payment Sub-Account by debiting the Proceeds Account;

provided that, for purposes of subclauses (i) and (ii), Operating Costs shall
not include Extraordinary Major Maintenance Expenditures, Borrower's obligations
with respect to any Royalty Tax Claim and costs and expenses incurred for the
construction of the Power Generation Facility, to the extent funds are available
for payment of the same in the Extraordinary Major Maintenance Reserve
Sub-Account, the Tax Contingency Reserve Sub-Account or the Power Generator
Reserve Sub-Account, as the case may be.

     (b) On any Monthly Transfer Date after the date of Start-Up of Commercial
Production, the Trustee shall apply the balance standing to the credit of the
Proceeds Account in the following order of priority (based upon information
contained within the Withdrawal Certificate):

          (i) First, to make the transfers requested by Borrower pursuant to
     clauses (a)(i) and (a)(ii) above, if any;

          (ii) Second, to credit funds to the Senior Debt Accumulation
     Sub-Account by debiting the Proceeds Account in an amount equal to the
     difference between the Required Senior Debt Accumulation Amount (as
     reasonably determined by the Borrower or, if the Borrower fails to do so
     within five (5) Business Days after a request thereof, by the
     Administrative Agent) and the balance of the Senior Debt Accumulation
     Sub-Account immediately prior to such credit; and

          (iii) Third, to make any other transfers requested by Borrower
     pursuant to clause (a)(iii) through (a)(xi) above.

     (c) On any NY Business Day, upon instructions from the Administrative Agent
(acting upon instructions from the Majority Facility Lenders), the Trustee
shall, as instructed by the Administrative Agent, use funds credited to the
Proceeds Account to make any payment to obtain such insurance coverage or pay
premium due on existing coverage, that the Borrower has not obtained or paid in
accordance with Appendix II to the Master Participation Agreement.

     (d) On any Payment Date, the Trustee shall transfer funds credited to the
Proceeds Account as contemplated in Section 4.10.

     4.04 Transfers from Senior Debt Accumulation Sub-Account. On any Payment
Date, the Trustee shall (based upon information contained within the Withdrawal
Certificate) apply the balance standing to the credit of the Senior Debt
Accumulation Sub-Account to pay all Senior Loans Obligations due and payable on
such date (as reasonably determined by the Borrower or, if the Borrower fails to
do so within five (5) Business Days after a request thereof, by the
Administrative Agent).


                                       19

     4.05 Transfers from Senior Debt Service Reserve Sub-Account. The Trustee
shall apply the balance standing to the credit of the Senior Debt Service
Reserve Sub-Account as follows (based upon information contained within the
Withdrawal Certificate):

          (i) On any NY Business Day, upon request from the Borrower, to the
     extent any Senior Debt Service Reserve Excess (as reasonably determined by
     the Borrower or, if the Borrower fails to do so within five (5) Business
     Days after a request thereof, by the Administrative Agent) exists, the
     Trustee shall credit funds to the Proceeds Account by debiting the Senior
     Debt Service Reserve Sub-Account in an amount equal to such Senior Debt
     Service Reserve Excess.

          (ii) On any NY Business Day, to the extent that (x) no funds are
     credited to the Proceeds Account and (y) the balance standing to the credit
     of the Senior Debt Service Reserve Sub-Account exceeds fifty percent (50%)
     of the next succeeding Senior Debt Service Installment (such excess, the
     "Senior Debt Service Reserve Releasable Amount") upon request from the
     Borrower, the Trustee shall transfer funds credited to the Senior Debt
     Service Reserve Sub-Account, up to the Senior Debt Service Reserve
     Releasable Amount to make any transfer or payment permitted to be made
     under Section 4.03(a)(i) and 4.03(a)(ii).

          (iii) On any NY Business Day upon request from the Borrower, to make a
     Restricted Payment, subject to prior receipt by the Trustee of an
     Acceptable Credit Support Instrument in the amount of such Restricted
     Payment.

          (iv) On any Payment Date, as contemplated in Section 4.10.

     4.06 Transfers from Extraordinary Major Maintenance Reserve Sub-Account.
The Trustee shall apply the balance standing to the credit of the Extraordinary
Major Maintenance Reserve Sub-Account as follows (based upon information
contained within the Withdrawal Certificate):

          (i) On any NY Business Day, upon request from the Borrower, to the
     extent any Extraordinary Major Maintenance Reserve Excess (as reasonably
     determined by the Borrower or, if the Borrower fails to do so within five
     (5) Business Days after a request thereof, by the Administrative Agent)
     exists, the Trustee shall credit funds to the Proceeds Account by debiting
     the Extraordinary Major Maintenance Reserve Sub-Account in an amount equal
     to such Extraordinary Major Maintenance Reserve Excess.

          (ii) On any NY Business Day, upon request from the Borrower, to pay
     for Extraordinary Major Maintenance Expenditures that are due and payable.

          (iii) On any NY Business Day, upon request from the Borrower, to make
     a Restricted Payment, subject to prior receipt by the Trustee of an
     Acceptable Credit Support Instrument in the amount of such Restricted
     Payment.

          (iv) On any Payment Date, as contemplated in Section 4.10.


                                       20

     4.07 Transfers from the Tax Contingency Reserve Sub-Account. The Trustee
shall apply the balance standing to the credit of the Tax Contingency Reserve
Sub-Account as follows (based upon information contained within the Withdrawal
Certificate):

          (i) On any NY Business Day, upon request from the Borrower, to the
     extent any Tax Contingency Reserve Excess (as reasonably determined by the
     Borrower or, if the Borrower fails to do so within five (5) Business Days
     after a request thereof, by the Administrative Agent) exists, the Trustee
     shall credit funds to the Proceeds Account by debiting the Tax Contingency
     Reserve Sub-Account in an amount equal to such Tax Contingency Reserve
     Excess so long as the Borrower delivers to the Trustee with a copy to the
     Administrative Agent a certificate certifying that the funds remaining in
     the account are no less than Tax Contingency Reserve Amount as determined
     in accordance with United States GAAP.

          (ii) On any NY Business Day, upon request from the Borrower, to
     satisfy and pay in whole or in part and by way of settlement or otherwise
     Borrower's obligations with respect to any Royalty Tax Claim.

          (iii) On any NY Business Day, upon request from the Borrower, to make
     a Restricted Payment, subject to prior receipt by the Trustee of an
     Acceptable Credit Support Instrument in the amount of such Restricted
     Payment.

          (iv) On any Payment Date, as contemplated in Section 4.10.

     4.08 Transfers from the Power Generator Reserve Sub-Account. The Trustee
shall apply the balance standing to the credit of the Power Generator Reserve
Sub-Account as follows(based upon information contained within the Withdrawal
Certificate):

          (i) On any NY Business Day, upon request from the Borrower, to the
     extent any Power Generator Reserve Excess (as reasonably determined by the
     Borrower or, if the Borrower fails to do so within 5 Business Days after a
     request thereof, by the Administrative Agent) exists, the Trustee shall
     credit funds to the Proceeds Account by debiting the Power Generator
     Reserve Sub-Account in an amount equal to such Power Generator Reserve
     Excess.

          (ii) On any NY Business Day, upon request from the Borrower, to pay
     for costs and expenses incurred for the construction of the Power
     Generation Facility, as they become due.

          (iii) On any NY Business Day, upon request from the Borrower, to make
     a Restricted Payment, subject to prior receipt by the Trustee of an
     Acceptable Credit Support Instrument in the amount of such Restricted
     Payment.

          (iv) On any Payment Date, as contemplated in Section 4.10.

     4.09 Transfers from the Restricted Payment Sub-Account. The Trustee shall
apply the balance standing to the credit of the Restricted Payment Sub-Account
as follows (based upon information contained within the Withdrawal Certificate):


                                       21

          (i) On any NY Business Day, upon request from the Borrower:

               (A) to make any Permitted Incremental Capital Expenditures or
          Permitted Ancillary Capital Expenditures;

               (B) to make any Restricted Payment subject to prior receipt by
          the Trustee of a duly completed Restricted Payment Certificate;

               (C) to make any Restricted Payment, subject to prior receipt by
          the Trustee of a duly completed Partial Restricted Payment Certificate
          and of an Acceptable Credit Support Instrument in the amount of such
          Restricted Payment; and

               (D) to the Proceeds Account;

     provided that, if on a given NY Business Day, the Borrower instructs the
     Trustee to make several of the transfers and payments described in
     sub-clauses (A) through (D) above, the balance standing to the credit of
     the Restricted Payment Sub-Account on such Business shall be applied first
     to make the payments described in sub-clause (A), second to make the
     payments described in sub-clause (B), third to make the payments described
     in sub-clause (C) and fourth to make the transfer described in sub-clause
     (D).

          (ii) On any Payment Date, as contemplated in Section 4.10.

     4.10 Withdrawals to Pay Senior Loans Obligations. If on a Payment Date the
balance of the Senior Debt Accumulation Sub-Account is not sufficient to pay in
full all Senior Loans Obligations (as reasonably determined by the Borrower or,
if the Borrower fails to do so within 5 Business Days after a request thereof,
by the Administrative Agent) scheduled to be paid on such date, the Trustee
shall, not later than 11:00 a.m. New York time on such Payment Date, withdraw
funds from the Proceeds Account by debiting the Proceeds Account and the
following Sub-Accounts, in strict conformity with the following order of
priority, in such amounts as may be necessary in order to pay in full such
Senior Loans Obligations:

          (i) First, from the Restricted Payment Sub-Account, to the extent of
     the funds credited thereto.

          (ii) Second, from the Senior Debt Service Reserve Sub-Account, to the
     extent of the funds credited thereto;

          (iii) Third, from the Proceeds Account, to the extent of the funds
     credited thereto;

          (iv) Fourth, from the Power Generator Reserve Sub-Account, to the
     extent of the funds credited thereto;

          (v) Fifth, from the Tax Contingency Reserve Sub-Account, to the extent
     of the funds credited thereto; and


                                       22

          (vi) Sixth, from the Extraordinary Major Maintenance Reserve
     Sub-Account, to the extent of the funds credited thereto;

     4.11 Onshore Dollars Account.

     (a)  Deposits into Onshore Dollars Account.

          (i) Each Senior Facility Lenders shall cause the proceeds of all
     Senior Facility Loans provided by it to be deposited into the Onshore
     Dollars Account.

          (ii) Deposits may be made into the Onshore Dollars Account by
     transferring funds from the Proceeds Account in accordance with Section
     4.03(a) or Section 4.05(ii).

          (iii) Deposits may be made into the Onshore Dollars Account by
     transferring funds from the Operating Onshore Dollars Account in accordance
     with Section 4.12(b)(ii).

          (iv) Deposits may be made into the Onshore Dollars Account by
     transferring funds from the Onshore Nuevos Soles Account in accordance with
     Section 4.13(b)(ii).

          (v) In addition, the Borrower shall, promptly but in any event within
     15 Business Days of the Closing Date, instruct each Buyer from whom the
     Borrower is entitled to receive any Proceeds from Domestic Sales to pay the
     same into the Onshore Dollars Account and if, notwithstanding such
     instructions, any such payment should be deposited into any other account
     or paid to any other Person, Borrower shall promptly deliver such payment
     (or cause it to be delivered) into the Onshore Dollars Account.

     (b)  Transfers from the Onshore Dollars Account.

          (i) On any Peruvian Business Day, the Borrower shall have the right to
     withdraw funds from the Onshore Dollars Account to (x) make any payment on
     account of Operating Costs of Borrower and of Project Costs and (y) credit
     funds to the Proceeds Account.

          (ii) On any Peruvian Business Day, the Borrower shall have the right
     to transfer funds from the Onshore Dollars Account to the Operating Onshore
     Dollars Account and the Onshore Nuevos Soles Account.

     4.12 Operating Onshore Dollars Account.

     (a)  Deposits into Operating Onshore Dollars Account.

          (i) Deposits may be made into the Operating Onshore Dollars Account by
     transferring funds from the Onshore Dollars Account in accordance with
     Section 4.11(b)(ii).


                                       23

          (ii) Deposits may be made into the Operating Onshore Dollars Account
     by transferring funds from the Operating Onshore Nuevos Soles Account in
     accordance with Section 4.14(b)(ii).

     (b)  Transfers from the Operating Onshore Dollars Account.

          (i) On any Peruvian Business Day, the Borrower shall have the right to
     withdraw funds from the Operating Onshore Dollars Account to (x) make any
     payment on account of Operating Costs of Borrower and of Project Costs and
     (y) credit funds to the Proceeds Account.

          (ii) On any Peruvian Business Day, the Borrower shall have the right
     to transfer funds from the Operating Onshore Dollars Account to the
     Operating Onshore Nuevos Soles Account and the Onshore Dollars Account.

     4.13 Onshore Nuevos Soles Account.

     (a)  Deposits into Onshore Nuevos Soles Account.

          (i) Deposits may be made into the Onshore Nuevos Soles Account by
     transferring funds from the Proceeds Account in accordance with Section
     4.03(a) or Section 4.05(ii).

          (ii) Deposits may be made into the Onshore Nuevos Soles Account by
     transferring funds from the Operating Onshore Nuevos Soles Account in
     accordance with Section 4.14(b)(ii).

          (iii) Deposits may be made into the Onshore Nuevos Soles Account by
     transferring funds from the Onshore Dollars Account in accordance with
     Section 4.11(b)(ii).

     (b)  Transfers from the Onshore Nuevos Soles Account.

          (i) On any Peruvian Business Day, the Borrower shall have the right to
     withdraw funds from the Onshore Nuevos Soles Account to (x) make any
     payment on account of Operating Costs of Borrower and of Project Costs and
     (y) credit funds to the Proceeds Account.

          (ii) On any Peruvian Business Day, the Borrower shall have the right
     to transfer funds from the Onshore Nuevos Soles Account to the Operating
     Onshore Nuevos Soles Account and the Onshore Dollars Account.


                                       24

     4.14 Operating Onshore Nuevos Soles Account.

     (a)  Deposits into Operating Onshore Nuevos Soles Account.

          (i) Deposits may be made into the Operating Onshore Nuevos Soles
     Account by transferring funds from the Onshore Nuevos Soles Account in
     accordance with Section 4.13(b)(ii).

          (ii) Deposits may be made into the Operating Onshore Nuevos Soles
     Account by transferring funds from the Operating Onshore Dollars Account in
     accordance with Section 4.12(b)(ii).

     (b)  Transfers from the Operating Onshore Nuevos Soles Account.

          (i) On any Peruvian Business Day, the Borrower shall have the right to
     withdraw funds from the Operating Onshore Nuevos Soles Account to (x) make
     any payment on account of Operating Costs of Borrower and of Project Costs
     and (y) credit funds to the Proceeds Account.

          (ii) On any Peruvian Business Day, the Borrower shall have the right
     to transfer funds from the Operating Onshore Nuevos Soles Account to the
     Operating Onshore Dollars Account and the Onshore Nuevos Soles Account.

     4.15 Provisions Common to the Onshore Accounts. On any Peruvian Business
Day, if the aggregate balance standing to the credit of the Onshore Accounts
exceeds the sum of the amount of estimated Operating Costs and Onshore Project
Costs of Borrower over the next succeeding 60 days (or following the receipt by
Borrower of the notice specified in Section 5.01(a)(vii), 30 days) and Onshore
Project Costs over the next succeeding 90 days (or following the receipt by
Borrower of the notice specified in Section 5.01(a)(vii), 30 days) (as
reasonably determined by the Borrower) (the "Onshore Accounts Cap") by more than
US$50,000, the Borrower shall promptly instruct the Depository Bank or the
Onshore Bank, as the case may be, to effect a transfer of funds from the various
Onshore Accounts to the Proceeds Account in such amount as necessary so that the
aggregate balances standing to the credit of the Onshore Accounts after such
transfer or transfers do not exceed the Onshore Accounts Cap. The Borrower shall
have the right at its discretion to decide from which Onshore Accounts such
transfers shall be made.

     4.16 Directions for Withdrawal and Transfer. Any direction or instruction
required or authorized to be given hereunder to the Trustee, the Offshore
Collateral Agent or the Onshore Collateral Agent for the withdrawal or transfer
of moneys in an Account shall be given by a Withdrawal Certificate, by
facsimile, and in any other manner that the Trustee, the Offshore Collateral
Agent or the Onshore Collateral Agent, as the case may be, may agree to accept
(subject to normal and customary verification requirements), in each case from
persons designated and identified in an Incumbency Certificate (substantially in
the form attached hereto as Exhibit L) to the Trustee, the Offshore Collateral
Agent or the Onshore Collateral Agent, as the case may be, for such purpose by
the Borrower. All requests for transfers must be received by the Trustee by 3:00
p.m. New York time. Any request received after 3:00 p.m. New York time shall be
deemed received on the next Business Day.


                                       25

     4.17 Waterfall During Continuation of Borrower Event of Default or Event of
Political Force Majeure. After the Trustee and the Borrower have received a
notice from the Administrative Agent pursuant to Section 5.01(a)(iii) or Section
5.10 of this Agreement directing the Trustee and the Borrower to apply funds in
the Accounts as contemplated in this Section 4.17 (and until such time as the
Trustee and the Borrower shall have received a notice from the Administrative
Agent pursuant to Section 5.01(a)(iii) or Section 5.10, to no longer apply the
funds in the Accounts as contemplated in this Section 4.17), the Trustee shall
continue to apply funds standing to the credit of the Proceeds Account and its
Sub-Accounts and the Borrower shall continue to apply funds standing to the
credit of the Onshore Accounts, as contemplated in this Article IV, except that:

          (i) Upon receipt of such notice from the Administrative Agent, the
     Trustee shall apply the balance standing to the credit of the Restricted
     Payment Sub-Account to credit the Proceeds Account and, thereafter, the
     Trustee shall not make any further credit to the Restricted Payment
     Sub-Account pursuant to Section 4.03(a); and

          (ii) References to Operating Costs in Section 4.03(a), 4.11(b),
     4.12(b), 4.13(b) and 4.14(b) shall be replaced by references to Limited
     Operating Costs.

     4.18 Waterfall Following Borrower Enforcement Direction. After receipt by
the Administrative Agent of a Borrower Enforcement Direction that requires funds
standing to the credit of the Accounts to be applied as contemplated in this
Section 4.18, the Trustee shall operate the Proceeds Account and its
Sub-Accounts as set forth in this Section 4.18 and the Onshore Collateral Agent
shall have the exclusive right to direct transfers of funds on deposit in the
Onshore Accounts. On any Business Day, the Trustee shall apply funds standing to
the credit of the Proceeds Account and its Sub-Accounts and the Onshore
Collateral Agent shall apply funds standing to the credit of the Onshore
Accounts in the following order of priority and no application at any such
priority level shall be made if any application remains to be made at any higher
priority level:

          (i) First, to pay all fees, compensation, costs, charges, expenses and
     indemnities due to any of the Appointed Parties (as determined by such
     Appointed Party or, if such Appointed Party fails to do so within 5
     Business Days after a request thereof, by the Borrower);

          (ii) Second, to the payment (as determined by the Administrative Agent
     or, if the Administrative Agent fails to do so within 5 Business Days after
     a request thereof, by the Borrower), in such order of priority, of:

               (A) the whole amount of Senior Loans Obligations that are fees,
          commissions, indemnities and reimbursement expenses;

               (B) interest (including post-default interest);

               (C) principal; and

               (D) all other amounts owing in respect of such Senior Loans
          Obligations;


                                       26

     and in case such moneys shall not be sufficient to pay in full the whole
     amount so due and unpaid under either clause (A), (B), (C) or (D), then to
     make Pro Rata Payments, without any preference or priority, to each Senior
     Lender; and

          (iii) Third, as directed by the Borrower, any portion of such funds
     remaining after application pursuant to clauses "first" and "second" above.

     4.19 Acceptable Credit Support Instruments.

     (a) All references in this Agreement to funds standing to the credit of any
of the Accounts or Sub-Accounts shall include all Acceptable Credit Support
Instruments provided with respect thereto.

     (b) The Trustee shall, without need for further instruction or
authorization, make drawings under any Acceptable Credit Support Instrument,
held by it at any time that a payment or transfer is required to be made from a
Sub-Account with respect to which such Acceptable Credit Support Instrument has
been delivered to the Trustee and sufficient funds are not then available in
such Sub-Account (after any necessary liquidation of Permitted Investments
therein pursuant to Section 4.20(b)) to make the full amount of such payment or
transfer. In such a case, the Trustee shall draw under the Acceptable Credit
Support Instrument such amount (up to the aggregate undrawn amount of such
Acceptable Credit Support Instrument) as may be necessary to make the full
amount of such required payment or transfer. In addition, (i) at any time after
receipt by the Trustee of a Borrower Enforcement Direction, the Trustee shall
draw under such Acceptable Credit Support Instrument(s) specified in such
Enforcement Direction, in the amounts and at the times specified in such
Enforcement Direction and (ii) at any time (A) that any Acceptable Credit
Support Instrument is scheduled to expire during the following fifteen (15)
Business Days and (B) no Acceptable Credit Support Instrument, with a later
expiry date and in a face amount greater than or equal to the undrawn amount of
the expiring Acceptable Credit Support Instrument has been delivered to the
Trustee in replacement therefor, the Trustee shall draw under the Acceptable
Credit Support Instrument so expiring, the full undrawn amount of such
Acceptable Credit Support Instrument.

     (c) At any time prior to a Borrower Enforcement Direction and at the
written request of the Borrower, the Trustee shall return to the Borrower:

          (i) any Acceptable Credit Support Instrument provided with respect to
     the Senior Debt Service Reserve Sub-Account, the Extraordinary Major
     Maintenance Reserve Sub-Account, the Tax Contingency Reserve Sub-Account
     and the Power Generator Sub-Account if (and only to the extent that) a
     Senior Debt Service Reserve Excess, an Extraordinary Major Maintenance
     Reserve Excess, a Tax Contingency Reserve Excess or a Power Generator
     Reserve Excess, as the case may be, exists (in each case (x) as identified
     by the Borrower to the Administrative Agent at least 15 Business Days prior
     to the proposed date for the return of such Acceptable Credit Support
     Instrument and so long as the Administrative Agent acting upon instructions
     from the Majority Lenders does not object to such determination within 15
     Business Days of such identification and (y) it being understood that the
     Trustee shall have no duty to verify whether the events set forth above
     have occurred); and


                                       27

          (ii) any Acceptable Credit Support Instrument provided with respect to
     a Restricted Payment made in the circumstances contemplated under Section
     4.09(i)(C) if the Borrower provides the Trustee with a duly completed
     Restricted Payment Certificate in replacement of the Partial Restricted
     Payment Certificate in connection with which the Borrower had previously
     provided the Acceptable Credit Support Instrument.

     4.20 Investment of Funds in Accounts.

     (a) Unless a Borrower Event of Default shall be Continuing, the Trustee
shall invest funds (and vary and redeem such investments) in the Proceeds
Account and its Sub-Accounts, as directed by the Borrower, and the Borrower
shall have the right to cause the investment of funds in the Onshore Accounts,
provided in each case that such investment is a Permitted Investment. During the
Continuance of a Borrower Event of Default, investments in Permitted Investments
shall be made as directed by the Administrative Agent (acting upon instructions
from the Majority Lenders) or as directed by the Borrower if the Administrative
Agent (acting upon instructions from the Majority Lenders) so agrees.

     (b) Whenever the Trustee is directed or authorized in accordance with the
terms hereof to make a transfer of funds among Accounts or Sub-Accounts, after
application of all other available funds, the Trustee shall allocate to the
Account or Sub-Account to which such funds are to be transferred a portion of
any Permitted Investment that would otherwise have to be liquidated to
accomplish such transfer in an amount corresponding to the amount to be so
transferred. Whenever the Trustee is directed or authorized in accordance with
the terms hereof to make a transfer of funds from the Accounts (unless such
transfer is between Accounts or Sub-Accounts), if, after application of all
other available funds, liquidation of a Permitted Investment is necessary to
make any such transfer, the Trustee is authorized to liquidate such Permitted
Investment. If any Permitted Investment so liquidated is then allocated to more
than one Account or Sub-Account, and it is not possible to liquidate only the
portion of such Permitted Investment allocated to the Account or Sub-Account
from which such transfer is to be made, then the entire Permitted Investment
shall be liquidated, and the proceeds of such liquidation shall be allocated to
the Accounts or Sub-Accounts involved in the same proportion as the allocation
of such Permitted Investment, except that the net costs and expenses, if any, of
such liquidation (including any loss of principal) shall be allocated entirely
to the Account or Sub-Account from which the transfer of funds was required to
be made. The Trustee shall liquidate all those Permitted Investments which can
be liquidated without interest cost or penalty before it shall liquidate any
Permitted Investment, the liquidation of which would involve an interest cost or
penalty. The Trustee shall have no liability with respect to any interest cost
or penalty on the liquidation of any Permitted Investment pursuant to this
Section 4.20(b).

     (c) The Trustee shall have no liability with respect to Permitted
Investments (or any losses resulting therefrom) made at the direction of the
Borrower or the Administrative Agent pursuant to clause (a) or (b) of this
Section 4.20.

     (d) All references in this Agreement to the Accounts and to cash, moneys or
funds therein or balances thereof shall include the investments in which such
moneys are then invested.


                                       28

     (e) The Trustee may execute any investment instruction provided to it in
respect of the Permitted Investments through its Affiliates, and neither the
Trustee nor its Affiliates shall have a duty to monitor the investment rating of
any such Permitted Investments. The Trustee will have no obligation to invest or
reinvest any funds if all or a portion of such funds are deposited with the
Trustee after 4:00 p.m. New York time on the day of deposit. Instructions to
invest or reinvest that are received after 4:00 p.m. New York time will be
treated as if received on the following business day in New York. The Trustee
will have the power to sell or liquidate Permitted Investments whenever the
Trustee will be required to make a transfer pursuant to the terms hereof. The
Trustee will have no responsibility for any investment losses resulting from the
investment, reinvestment or liquidation of any funds. Any interest or other
income received on Permitted Investments will become part of the trust funds
held by the Trustee in accordance with the terms hereof and will be deemed to be
funds of the Borrower for U.S. tax purposes. If a selection is not made, the
balance standing to the credit of the Proceeds Account will remain uninvested
with no liability for interest therein. It is agreed and understood that the
Trustee may earn fees associated with Permitted Investments.

     4.21 Currencies. Unless a Borrower Event of Default shall be Continuing,
all exchanges or purchases of currencies, including currency conversions in
connection with transfers of funds between an Onshore Account denominated in
Dollars and an Onshore Account denominated in Nuevos Soles (or vice versa),
shall be directed by the Borrower. In the event that the Borrower directs the
Onshore Collateral Agent to make such exchange or purchase, the Onshore
Collateral Agent shall effect such exchange or purchase as directed, and the
cost and expense of all such transactions shall be for the account of the
Borrower. The Onshore Collateral Agent shall not be responsible for any losses
occurring as the result of any conversions, exchanges or purchases of currencies
hereunder unless such loss was the result of the Onshore Collateral Agent's
gross negligence or willful misconduct. During the Continuance of a Borrower
Event of Default, foreign exchange transactions shall be made as directed by the
Administrative Agent (acting upon instructions from the Majority Lenders), or as
directed by the Borrower if the Administrative Agent (acting upon instructions
from the Majority Lenders) so agrees.

     4.22 Interest. Any interest or other earnings accrued on any balances in
any Account or Sub-Account, or on any investment thereof, shall be credited to
and accumulated in such Account or Sub-Account and thereafter be applied without
differentiation from other funds in such Account or Sub-Account.

     4.23 Reports to the Borrower and the Senior Lenders.

     (a) The Trustee shall deliver to the Borrower and to the Administrative
Agent a report with respect to the Proceeds Account and its Sub-Accounts,
setting forth in reasonable detail all deposits to and disbursements from such
Account and Sub-Accounts, including the date on which made, and the balances of
and any investments in such Account and Sub-Accounts.

     (b) Such reports shall be delivered within 15 Business Days after the end
of the calendar month during which the Closing Date occurs and each calendar
month thereafter, to the Borrower and to the Administrative Agent.


                                       29

     (c) The Borrower shall be given remote access (including the ability to
print reports) to the Proceeds Account and its Sub-Accounts.

     (d) The Trustee shall provide any additional information or reports
relating to the Proceeds Account and its Sub-Accounts and the transactions
therein and the Acceptable Credit Support Instrument reasonably requested from
time to time by the Borrower or the Administrative Agent (acting upon
instructions from any Senior Lender).

     (e) The Borrower shall cause the Depository Bank to deliver to the
Administrative Agent, within 15 Business Days after the end of the calendar
month during which the Closing Date occurs and each calendar month thereafter, a
report with respect to the Onshore Dollars Account and the Onshore Nuevos Soles
Account, setting forth in reasonable detail all deposits to and disbursements
from such Accounts, including the date on which made, and the balances of and
any investments in such Accounts.

     4.24 Limitations on Trustee's, Offshore Collateral Agent's and Onshore
Collateral Agent's Duties. Except as set forth in Section 7.05 hereof, none of
the Trustee, the Offshore Collateral Agent and the Onshore Collateral Agent
shall have any duty to, nor shall it, consider (i) whether any notice, direction
or certificate given by the Borrower or the Administrative Agent pursuant to
this Article IV or otherwise is true or correct, (ii) whether a transfer,
withdrawal or disposition of funds from any Account that the Borrower or the
Administrative Agent directs the Trustee, the Offshore Collateral Agent and the
Onshore Collateral Agent to make is for a purpose set forth in this Article IV,
(iii) whether any investment directed to be made by the Borrower or the
Administrative Agent is a Permitted Investment or (iv) whether a transfer of
funds among or between Accounts or Sub-Accounts is for a purpose set forth in
this Article IV. In fulfilling its duties hereunder with respect to operation of
the Accounts in compliance with the requirements of this Agreement, the Trustee,
the Offshore Collateral Agent and the Onshore Collateral Agent shall be required
to use the degree of care required of it under applicable law and by this
Agreement.

     4.25 Books and Records.

     (a) The Trustee and the Offshore Collateral Agent shall maintain all such
accounts, books and records as may be necessary properly to record all
transactions carried out by it with respect to the Proceeds Account and its
Sub-Accounts. The Trustee and the Offshore Collateral Agent shall permit the
Borrower and the Administrative Agent (acting upon instructions from the
Majority Lenders) to examine such accounts, books and records, provided that any
such examination shall occur upon reasonable notice and during normal business
hours.

     (b) The Borrower shall cause each of the Depository Bank and the Onshore
Bank to maintain all such accounts, books and records as may be necessary
properly to record all transactions carried out by it with respect to the
Onshore Accounts maintained by it. The Borrower shall cause the Depository Bank
and the Onshore Bank to permit the Administrative Agent (acting upon
instructions from the Majority Lenders) to examine such accounts, books and
records, provided that any such examination shall occur upon reasonable notice
and during normal business hours.


                                       30

     4.26 Stamp and Other Similar Taxes. The Borrower agrees to indemnify and
hold harmless the Trustee and the Collateral Agents from, and shall reimburse
the Trustee and the Collateral Agents for, any present or future claim for
liability for any stamp or other similar tax and any penalties or interest with
respect thereto, which may be assessed, levied or collected by any jurisdiction
in connection with this Agreement, the Financing Document, or the trust created
hereunder. The obligations of the Borrower under this Section shall survive the
termination of the other provisions of this Agreement.

     4.27 Inadequately Identified Amounts. In the event that the Offshore
Collateral Agent or the Onshore Collateral Agent receives any amount which is
inadequately or incorrectly identified as to the Account into which such amount
is to be credited, the Offshore Collateral Agent or the Onshore Collateral
Agent, as the case may be, shall notify the Administrative Agent of such event
and shall request instructions as to the Account into which such amount should
be credited. The Offshore Collateral Agent shall credit such amount to the
Proceeds Account and the Onshore Collateral Agent shall credit such amount to
the Onshore Dollars Account (in the case of U.S.$) or to the Onshore Nuevos
Soles Account (in the case of Nuevos Soles) until such time as they receive
instructions from the Administrative Agent stating that such amount should be
credited to another Account in accordance with this Agreement, in which case
they shall credit such amount to the Account designated by the Administrative
Agent.

                                   ARTICLE V

                                    REMEDIES

     5.01 First Stage Remedies.

     (a) Remedies other than Acceleration. At any time during the Continuance of
a Borrower Event of Default:

          (i) each Senior Facility Lender shall have the right to apply the
     relevant interest rate provided for in its Senior Facility Loan Agreement;

          (ii) the Common Representative shall have the right to apply the
     relevant interest rate provided for in the Peruvian Bonds Indenture,
     relevant Supplemental Indenture or relevant Offering Circular, as the case
     may be;

          (iii) the Administrative Agent (acting upon instructions from the
     Majority Lenders) shall have the right to send a notice to the Trustee and
     the Borrower directing the Trustee and the Borrower to apply funds in the
     Accounts as contemplated in Section 4.17, provided that upon the subsequent
     delivery of a Borrower Cessation Notice to the Administrative Agent, the
     Administrative Agent shall promptly send a notice to the Trustee and the
     Borrower directing the Trustee and the Borrower to no longer apply funds in
     the Accounts as contemplated in Section 4.17;

          (iv) the Administrative Agent (acting upon instructions from the
     Majority Lenders) shall have the right to direct the investment of funds in
     the Accounts and to direct foreign exchange transactions;


                                       31

          (v) the Administrative Agent (acting upon instructions from the
     Majority Lenders) shall have the right, at its option, to require the
     Borrower to require the Operator to, for the full term of the Operator's
     Agreement, continue to provide management and support services, and render
     sales assistance, on the same terms and conditions as those contained in
     the Operator's Agreement as in effect at the time of such Borrower Event of
     Default (provided that such terms and conditions may be amended by
     agreement between the Operator and the Administrative Agent except that the
     Borrower shall require the Operator to (if the Administrative Agent so
     elects) perform such services and render such assistance at the direction
     of a committee or other group of representatives of the Senior Lenders);

          (vi) if the Operator is in breach of any of its material obligations
     under the Operator's Agreement, the Administrative Agent (acting upon
     instructions from the Majority Lenders) shall, without limitation to all
     other rights and remedies it may exercise hereunder, have the right to
     request the Borrower in writing to, and upon such written request the
     Borrower shall, terminate the Operator's Agreement and appoint, as a
     replacement Operator, an Acceptable PD Replacement identified by the
     Administrative Agent (acting upon instructions from the Majority Lenders),
     provided that any such termination shall not become effective until the
     earlier of (i) the designation of such Acceptable PD Replacement, as a
     replacement Operator, and (ii) the date six months after the Operator has
     been notified by the Administrative Agent of such required termination. The
     Borrower shall notify the Administrative Agent of any such termination and
     designation of a new Operator; and

          (vii) the Administrative Agent (acting upon instructions from the
     Majority Lenders) shall have the right to require the Borrower to limit the
     aggregate balance allowed to be held, on any Peruvian Business Day, to the
     Onshore Accounts to the sum of the amount of estimated Operating Costs and
     Onshore Project Costs of Borrower over the next succeeding 30 days.

     (b)  Acceleration.

          (i) At any time during the Continuance of a Borrower Payment Event of
     Default, a Borrower Abandonment Event of Default or a Borrower Completion
     Event of Default, the "Required Senior Lender Majority" (as defined below)
     shall have the right by written notice to the Borrower (for the purpose of
     this provision, the notice from the Peruvian Bondholders shall only be
     given by the Common Representative on behalf of the Peruvian Bondholders
     pursuant to appropriate Peruvian Bondholders voting requirement under the
     Peruvian Bonds Indenture):

               (A) To declare the Commitments of all Senior Lenders to be
          cancelled and terminated whereupon the same shall be immediately
          cancelled and terminated; and/or

               (B) To declare all Senior Loans Obligations payable to all Senior
          Lenders to be immediately due and payable, whereupon the same shall
          become immediately due and payable, without further notice and without
          presentment,


                                       32

          demand, protest or other notice of any kind, all of which are hereby
          expressly waived by the Borrower.

          For the purpose of this paragraph (i), the "Required Senior Lender
     Majority" shall mean (i) 30 days after the occurrence of the relevant
     Borrower Event of Default, the Supermajority Lenders, (ii) 90 days after
     the occurrence of the relevant Borrower Event of Default, the Majority
     Lenders and (iii) 225 days after the occurrence of the relevant Borrower
     Event of Default, (A) (x) prior to the Availability Period End Date, Senior
     Lenders representing at least 20% of the Aggregate Committed Amounts and
     the Aggregate Issued Bond Amount and (y) after the Availability Period End
     Date, Senior Lenders holding Senior Loans with an Outstanding Advance
     Amount equal to at least 20% of the Outstanding Advance Amount of the
     Senior Loans held by all Senior Lenders, and (B) at least two (2) Senior
     Lenders.

          (ii) At any time upon the occurrence of the Borrower Bankruptcy Event
     of Default, the Commitments of the Senior Lenders shall automatically be
     terminated and all Senior Loans Obligations payable to all Senior Lenders
     shall automatically become immediately due and payable, without further
     notice and without presentment, demand, protest or other notice of any
     kind, all of which are hereby expressly waived by the Borrower.

          (iii) At any time during the Continuance of a Borrower Expropriation
     Event of Default, the "Required Senior Lender Majority" (as defined below)
     shall have the right by written notice to the Borrower (for the purpose of
     this provision, the notice from the Peruvian Bondholders shall only be
     given by the Common Representative on behalf of the Peruvian Bondholders
     pursuant to appropriate Peruvian Bondholders voting requirement under the
     Peruvian Bonds Indenture):

               (A) To declare the Commitments of all Senior Lenders to be
          cancelled and terminated whereupon the same shall be immediately
          cancelled and terminated; and/or

               (B) To declare all Senior Loans Obligations payable to all Senior
          Lenders to be immediately due and payable, whereupon the same shall
          become immediately due and payable, without further notice and without
          presentment, demand, protest or other notice of any kind, all of which
          are hereby expressly waived by the Borrower.

          For the purpose of this paragraph (iii), the "Required Senior Lender
     Majority" shall be (i) 30 days after the occurrence of the relevant
     Borrower Event of Default, the Supermajority Lenders, and (ii) 90 days
     after the occurrence of the relevant Borrower Event of Default, the
     Majority Lenders.

          (iv) At any time during the Continuance of a Borrower Event of Default
     (other than a Borrower Event of Default described in clauses (i), (ii) and
     (iii) of this Section 5.01(b)), the "Required Senior Lender Majority" (as
     defined below) shall have the right by written notice to the Borrower (for
     the purpose of this provision, the notice from the Peruvian Bondholders
     shall only be given by the Common Representative on behalf of


                                       33

     the Peruvian Bondholders pursuant to appropriate Peruvian Bondholders
     voting requirement under the Peruvian Bonds Indenture):

               (A) To declare the Commitments of all Senior Lenders to be
          cancelled and terminated whereupon the same shall be immediately
          cancelled and terminated; and/or

               (B) To declare all Senior Loans Obligations payable to all Senior
          Lenders to be immediately due and payable, whereupon the same shall
          become immediately due and payable, without further notice and without
          presentment, demand, protest or other notice of any kind, all of which
          are hereby expressly waived by the Borrower.

          For the purpose of this paragraph (iv), the "Required Senior Lender
     Majority" shall be (i) 180 days after the occurrence of the relevant
     Borrower Event of Default, the Supermajority Lenders, and (ii) 360 days
     after the occurrence of the relevant Borrower Event of Default, the
     Majority Lenders.

     (c)  Rescission of Acceleration.

          (i) Upon the delivery of a Borrower Cessation Notice to the
     Administrative Agent, (x) the Requisite Lenders giving such Borrower
     Cessation Notice (in the case of a Borrower Cessation Notice that relates
     to a Borrower Payment Event of Default) or (y) the Majority Lenders (in the
     case of a Borrower Cessation Notice that relates to a Borrower Event of
     Default other than a Borrower Payment Event of Default or an MPA Event of
     Default referred to in Section 9.01(j) of the MPA), as the case may be,
     may, in its or their discretion, rescind and annul any termination or
     cancellation of any commitment or any acceleration (made during the
     Continuance of such Borrower Event of Default) of principal of Senior
     Loans, as the case may be, in which case the outstanding Commitments shall
     be reinstated and the principal amount of Senior Loans outstanding
     immediately prior to the delivery of such Borrower Cessation Notice shall
     be payable in installments on the dates scheduled for repayment thereof
     immediately prior to such acceleration; and

          (ii) Upon the delivery of a Borrower Cessation Notice with respect to
     cessation of an Event of Political Force Majeure the occurrence and
     continuance of which formed the sole basis for a declaration of an MPA
     Event of Default referred to in Section 9.01(j) of the MPA, if no other
     Borrower Event of Default is Continuing, then each Senior Lender shall
     rescind and annul any termination or cancellation of any commitment or any
     acceleration (made during the Continuance of such Borrower Event of
     Default) of principal of Senior Loans and the outstanding Commitments shall
     be reinstated and the principal amount of Senior Loans outstanding
     immediately prior to the delivery of such Borrower Cessation Notice shall
     be payable in equal installments on the dates scheduled for repayment
     thereof immediately prior to such acceleration;

     provided that no such rescission or annulment described in this Section
     shall (i) require any Senior Lender to return any amount received by it
     during the Continuance of such Borrower Event of Default and (ii) affect
     the declaration of a Borrower Event of Default


                                       34

     or the exercise of any remedies exercisable upon the occurrence of such
     subsequent Borrower Event of Default or impair any right of any Senior
     Lender with respect thereto.

     5.02 Second Stage Remedies.

     (a) Upon the occurrence of a Borrower Payment Event of Default, a Borrower
Bankruptcy Event of Default, a Borrower Abandonment Event of Default or a
Borrower Completion Event of Default:

          (i) 30 days after the occurrence of such Borrower Event of Default,
     the Senior Lenders pursuant to a Supermajority Vote shall have the right to
     request the Administrative Agent to take (or, as applicable, to direct the
     Offshore Collateral Agent to take) any and all Borrower Enforcement Actions
     by delivering to the Administrative Agent a notice identified as an
     enforcement direction (a "Borrower Enforcement Direction");

          (ii) 90 days after the occurrence of such Borrower Event of Default,
     the Majority Lenders shall have the right to send a Borrower Enforcement
     Direction to the Administrative Agent; and

          (iii) 225 days after the occurrence of such Event of Default (A) (x)
     prior to the Availability Period End Date, Senior Lenders representing at
     least 20% of the Aggregate Committed Amounts and the Aggregate Issued Bond
     Amount and (y) after the Availability Period End Date, Senior Lenders
     holding Senior Loans with an Outstanding Advance Amount equal to at least
     20% of the Outstanding Advance Amount of the Senior Loans held by all
     Senior Lenders, and (B) at least two (2) Senior Lenders, shall have the
     right to send a Borrower Enforcement Direction to the Administrative Agent.

     (b)  Upon the occurrence of a Borrower Expropriation Event of Default:

          (i) 30 days after the occurrence of such Borrower Event of Default,
     the Senior Lenders pursuant to a Supermajority Vote shall have the right to
     request the Administrative Agent to take (or, as applicable, to direct the
     Offshore Collateral Agent to take) any and all Borrower Enforcement Actions
     by delivering to the Administrative Agent a notice identified as an
     enforcement direction (a "Borrower Enforcement Direction"); and

          (ii) 90 days after the occurrence of such Borrower Event of Default,
     the Majority Lenders shall have the right to send a Borrower Enforcement
     Direction to the Administrative Agent.

     (c) Upon the occurrence of a Borrower Event of Default (other than a
Borrower Event of Default described in clauses (a) and (b) of this Section
5.02):

          (i) 180 days after the occurrence of such Borrower Event of Default,
     the Senior Lenders pursuant to a Supermajority Vote shall have the right to
     send a Borrower Enforcement Direction to the Administrative Agent; and


                                       35

          (ii) 360 days after the occurrence of such Borrower Other Event of
     Default, the Majority Lenders shall have the right to send a Borrower
     Enforcement Direction to the Administrative Agent.

     (d) Following receipt of a Borrower Enforcement Direction, the
Administrative Agent, if required to do so pursuant to such Borrower Enforcement
Direction, shall, without limitation to all other rights and remedies it may
exercise hereunder, have the right to request the Borrower in writing to, and
upon such written request the Borrower shall, terminate the Operator's Agreement
and appoint, as a replacement Operator, an Acceptable PD Replacement identified
in such Borrower Enforcement Direction, provided that any such termination shall
not become effective until the earlier of (i) the designation of such Acceptable
PD Replacement, as a replacement Operator, and (ii) the date six months after
the Operator has been notified by the Administrative Agent of such required
termination. The Borrower shall notify the Administrative Agent of any such
termination and designation of a new Operator.

     5.03 Borrower Enforcement Action by Offshore Collateral Agent and Onshore
Collateral Agent.

     (a) Upon receipt by the Administrative Agent of a Borrower Enforcement
Direction as contemplated by Section 5.02, the Administrative Agent shall
promptly instruct the Offshore Collateral Agent and the Onshore Collateral Agent
to take one or more of the Borrower Enforcement Actions as set forth in Section
5.03(b) and 5.03(c) below, and shall at the same time instruct in writing the
Depository Bank and the Onshore Bank to the effect that as of the date of such
instruction Borrower shall no longer have any control over the Onshore Accounts.
A copy of such instruction will be delivered to the Borrower.

     (b) After a Borrower Enforcement Direction (requesting the Administrative
Agent to direct the Offshore Collateral Agent to take Borrower Enforcement
Actions) has been delivered to the Administrative Agent, upon receipt by the
Offshore Collateral Agent of instructions from the Administrative Agent
directing the Offshore Collateral Agent to take one or more of the following
actions, the Offshore Collateral Agent, for the benefit and on behalf of the
Secured Parties, shall have the right to:

          (i) sell or cause to be sold, subject to any mandatory requirement of
     applicable law, the Offshore Collateral either as an entirety or in
     parcels, at public or private auction, in each case at such place and at
     such time and upon such terms as the Administrative Agent may specify or
     may be required by applicable law; and/or

          (ii) proceed to protect and enforce its rights, for the benefit and on
     behalf of the Secured Parties, under this Agreement and the MPA by sale
     pursuant to judicial proceedings or by a proceeding in equity or at law or
     private sale or otherwise, whether for the enforcement of the security
     interests created under or pursuant to this Agreement or any of the other
     Security Documents or for the enforcement of any other legal, equitable or
     other remedy.


                                       36

     (c) After a Borrower Enforcement Direction (requesting the Administrative
Agent to direct the Onshore Collateral Agent to take Borrower Enforcement
Actions) has been delivered to the Administrative Agent, upon receipt by the
Onshore Collateral Agent of instructions from the Administrative Agent directing
the Onshore Collateral Agent to take one or more of the following actions, the
Onshore Collateral Agent, for the benefit and on behalf of the Secured Parties,
shall have the right to:

          (i) sell or cause to be sold, subject to any mandatory requirement of
     applicable law, the Onshore Collateral either as an entirety, or, if
     permitted by applicable law, in parcels to the highest bidder at public
     auction or, in the case of the pledges, at public or private auction, in
     each case at such place and at such time and upon such terms as the
     Administrative Agent may specify or may be required by applicable law;
     and/or

          (ii) proceed to protect and enforce its rights, for the benefit and on
     behalf of the Secured Parties, under this Agreement and the MPA by sale
     pursuant to judicial proceedings or by a proceeding in equity or at law or
     otherwise, whether for the enforcement of the security interests created
     under or pursuant to this Agreement or any of the other Security Documents
     or for the enforcement of any other legal, equitable or other remedy.

     5.04 Incidents of Sale.

     (a) Upon any sale of the Offshore Collateral by the Offshore Collateral
Agent, to the extent permitted by applicable law:

          (i) the Offshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, may bid for and purchase the property offered for
     sale, and upon compliance with the terms of sale may hold and dispose of
     such property;

          (ii) the Offshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, may make and deliver to the purchaser or purchasers a
     good and sufficient deed, bill of sale and instrument of assignment and
     transfer of the property sold; and

          (iii) the Offshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, in its own name, may make all necessary deeds, bills
     of sale and instruments of assignment and transfer, and may substitute one
     or more Persons with like power (and the Borrower hereby ratifies and
     confirms all that the Offshore Collateral Agent shall lawfully do by virtue
     hereof; but if so requested by the Offshore Collateral Agent or by any
     purchaser, the Borrower shall ratify and confirm any such sale or transfer
     by executing and delivering to the Offshore Collateral Agent or to such
     purchaser or purchasers all proper deeds, bills of sale, instruments of
     assignment and transfers and releases as may be designated in any such
     request).


                                       37

     (b) Upon any sale of the Onshore Collateral by the Onshore Collateral Agent
to the extent permitted by applicable law:

          (i) the Onshore Collateral Agent, for the benefit and on behalf of the
     Secured Parties, may bid for and purchase the property offered for sale,
     and upon compliance with the terms of sale may hold and dispose of such
     property;

          (ii) the Onshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, may make and deliver to the purchaser or purchasers a
     good and sufficient deed, bill of sale and instrument of assignment and
     transfer of the property sold; and

          (iii) the Onshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, in its own name, may make all necessary deeds, bills
     of sale and instruments of assignment and transfer, and may substitute one
     or more Persons with like power (and the Borrower hereby ratifies and
     confirms all that the Onshore Collateral Agent shall lawfully do by virtue
     hereof; but if so requested by the Onshore Collateral Agent or by any
     purchaser, the Borrower shall ratify and confirm any such sale or transfer
     by executing and delivering to the Onshore Collateral Agent or to such
     purchaser or purchasers all proper deeds, bills of sale, instruments of
     assignment and transfers and releases as may be designated in any such
     request, it being understood that a failure by Borrower to provide such
     ratification or confirmation shall not affect Senior Lenders' rights
     hereunder).

     (c) Upon a sale of the combined Common Stock of the Shareholders or
substantially all of the Project Property the Borrower shall permit, to the
extent permitted by applicable law, the purchaser thereof and its successors and
its and their assigns to take and use the name of the Borrower and to carry on
business under such name or any variant or variants thereof and to use and
employ any and all other trade names and trademarks of the Borrower; provided
that no such purchaser, successor or assign may take or use the name "Phelps
Dodge" or "Sumitomo" or any variant of either thereof.

     5.05 Control of Borrower Enforcement Action by Administrative Agent.

     (a) If the Senior Lenders have delivered to the Administration Agent a
Borrower Enforcement Direction (the Senior Lenders delivering such Borrower
Enforcement Direction, the "Borrower Enforcing Lenders"), together with an
indemnity or other arrangement to reimburse satisfactory to the Administrative
Agent, provided that neither the Peruvian Bondholders nor the Common
Representative shall be required to indemnify the Administrative Agent in an
amount in excess of the proceeds recovered by the Common Representative on
behalf of the Peruvian Bondholders as a result of such Borrower Enforcement
Action, then:

          (i) The Administrative Agent shall exercise its rights and powers
     vested in it by this Agreement or by any other Financing Agreement which it
     is directed by the Borrower Enforcing Lenders to exercise and shall not be
     liable with respect to any action taken or omitted to be taken by it in
     accordance with such Borrower Enforcement Direction; and


                                       38

          (ii) The Borrower Enforcing Lenders that have given such Borrower
     Enforcement Direction shall have the right to direct the time, method and
     place of conducting any proceeding for any remedy available to the
     Administrative Agent, or exercising any trust or power conferred upon the
     Administrative Agent hereunder; provided that (A) such direction shall not
     be in conflict with applicable law, this Agreement or any of the other
     Financing Documents and (B) the Administrative Agent may take any other
     action incidental to carrying out any such direction.

     (b) Without limiting the foregoing provisions of this Section 5.05 or any
other provision of this Agreement, the Senior Lenders agree to endeavor to
remain in continuous consultation with each other at all times during which
Borrower Enforcement Actions permitted hereby are being or can be taken
hereunder, and agree to endeavor to achieve a broad consensus on the manner,
timing, method and place of exercising the Senior Lenders' remedies with a view
to obtaining repayment of the Senior Loans Obligations.

     5.06 Control of Borrower Enforcement Action by Offshore Collateral Agent
and Onshore Collateral Agent. After a Borrower Enforcement Direction has been
delivered to the Administrative Agent, subject to receipt by the Offshore
Collateral Agent and the Onshore Collateral Agent of an indemnity or other
arrangement to reimburse satisfactory to it:

          (a) The Offshore Collateral Agent or the Onshore Collateral Agent, as
     the case may be, shall exercise its rights and powers vested in it by this
     Agreement or by any other Financing Agreement to which it is a party that
     it is directed by the Administrative Agent to exercise and shall not be
     liable with respect to any action taken or omitted to be taken by it in
     accordance with such Borrower Enforcement Direction; and

          (b) The Administrative Agent shall have the right to direct the time,
     method and place of conducting any proceeding for any remedy available to
     the Offshore Collateral Agent or the Onshore Collateral Agent, as the case
     may be, or exercising any trust or power conferred upon the Offshore
     Collateral Agent or the Onshore Collateral Agent, as the case may be,
     hereunder or under any other Financing Agreement; provided that (i) such
     direction shall not be in conflict with applicable law, this Agreement or
     any of the other Financing Documents and (ii) the Offshore Collateral Agent
     or the Onshore Collateral Agent, as the case may be, may take any other
     action incidental to carrying out any such direction.

     5.07 Limitation on Borrower Enforcement Action.

     (a) Without prejudice to the rights of the Peruvian Bondholders under
Articles 326 and 329 of the General Corporate Law, no Senior Lender (except by a
Borrower Enforcement Direction properly taken hereunder or as provided in this
Section) shall have the right in respect of this Agreement or any other
Financing Agreement to which it is a party to take any Borrower Enforcement
Action against the Borrower, it being understood and intended that no Senior
Lender shall have any rights in any manner whatsoever to affect, disturb or
prejudice the security interests created hereby or pursuant to the Security
Documents or the rights of any of the other Senior Lenders, or to obtain or seek
to obtain priority or preference over any other Senior Lender or to enforce any
rights under this Agreement except in the manner herein provided.


                                       39

     (b) Notwithstanding the provisions of paragraph (a) above, each Senior
Facility Lender and the Common Representative, on behalf of the Peruvian
Bondholders, shall have the right, without the consent of or participation by
the Administrative Agent or any other Senior Lender, when permitted under the
terms of this Agreement, to (i) institute any proceeding, judicial or otherwise
against the Borrower (other than a proceeding under bankruptcy law or other
reorganization, arrangement, rearrangement of debt, relief of debtors,
dissolution, insolvency, liquidation or similar law or for the appointment of a
receiver, trustee or other officer or representative of a court or creditors),
and (ii) obtain a judgment and/or an order of attachment or other similar
document issued by any court of competent jurisdiction, in each case, to the
extent, but only to the extent, necessary to preserve such Senior Lender's
rights against the Borrower which are in peril of losing their legal validity
due to the impending or anticipated expiration of any applicable statute of
limitations or similar law limiting the period of time in which legal action
must be taken or commenced; provided that such Senior Lender may not take any
action to enforce any such judgment or order of attachment against the Borrower.

     (c) If (i) the Borrower Enforcing Lenders have given a Borrower Enforcement
Direction to the Administrative Agent, (ii) the Borrower Enforcing Lenders have
offered to the Administrative Agent an indemnity or other arrangement to
reimburse reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such direction, and (iii) the
Administrative Agent, for 30 days after its receipt of such Borrower Enforcement
Direction, has failed to institute any proceeding, then, unless a successor
Administrative Agent shall have been appointed within 30 days thereafter
pursuant to Section 7.06 hereof, the Borrower Enforcing Lenders acting by
themselves may take, or agree that one or more Borrower Enforcing Lender may
take, any Borrower Enforcement Action that the Administrative Agent is
authorized to take hereunder.

     (d) At any time after a Borrower Enforcement Direction has been properly
given, the Borrower Enforcing Lenders may agree upon any other manner or method
of preserving, enforcing or collecting Senior Loans Obligations, whether or not
provided for or contemplated herein, provided that (i) any such agreement which
would result in payment or satisfaction of Senior Loans Obligations on a basis
which does not constitute a Pro Rata Payment shall require the consent of all
Senior Lenders, (ii) the Administrative Agent shall be notified of any such
agreement and (iii) any such agreement shall not adversely affect any of the
Administrative Agent's rights or indemnities under this Agreement or any
Financing Document or enlarge its duties hereunder or thereunder.

     5.08 Application of Proceeds. Following receipt of a Borrower Enforcement
Direction, the Administrative Agent shall have the right to request the Trustee
and the Collateral Agents to apply all funds standing to the credit of the
Accounts in Section 4.18. In addition, proceeds of any Borrower Enforcement
Action (including any proceeds from the sale of Offshore Collateral and/or the
Onshore Collateral) shall be applied promptly by the recipient thereof in the
order of priority set forth in Section 4.18.


                                       40

     5.09 Offshore Collateral Agent and Onshore Collateral Agent May File Proofs
of Claim.

     (a) In the event of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Borrower or the Offshore Collateral occurs or is
pending, the Offshore Collateral Agent (irrespective of whether the principal of
the Senior Loans is then due and payable) shall be entitled and empowered, by
intervention in such proceeding or otherwise, (i) to file and prove a claim for
its own claim and for the whole amount of the Senior Loans Obligations then
owing and unpaid and to file such other papers or documents as may be necessary
or advisable as directed by the Senior Lenders in order to have the claims of
the Offshore Collateral Agent (including any claim for the reasonable
compensation, disbursements and advances of the Offshore Collateral Agent, in
its individual capacity, its agents and counsel) and of the Senior Lenders
allowed in such judicial proceeding and (ii) to collect and receive any moneys
or other property payable or deliverable on any such claims and to distribute
the same; and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding is hereby
authorized to make any such payments to the Offshore Collateral Agent, for the
benefit and on behalf of the Secured Parties.

     (b) In the event of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Borrower or the Onshore Collateral occurs or is
pending, the Onshore Collateral Agent (irrespective of whether the principal of
the Senior Loans is then due and payable) shall be entitled and empowered, by
intervention in such proceeding or otherwise, (i) to file and prove a claim for
its own claim and for the whole amount of the Senior Loans Obligations then
owing and unpaid and to file such other papers or documents as may be necessary
or advisable as directed by the Senior Lenders in order to have the claims of
the Onshore Collateral Agent (including any claim for the reasonable
compensation, disbursements and advances of the Onshore Collateral Agent, in its
individual capacity, its agents and counsel) and of the Senior Lenders allowed
in such judicial proceeding and (ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized to
make any such payments to the Onshore Collateral Agent, for the benefit and on
behalf of the Secured Parties.

     5.10 Rights Arising Upon the Occurrence of an Event of Political Force
Majeure.

     (a) At any time during the Continuance of an Event of Political Force
Majeure, the Administrative Agent (acting upon instructions from the Majority
Lenders) shall have the right to send a notice to the Trustee and the Borrower
directing the Trustee and the Borrower to apply funds in the Accounts as
contemplated in Section 4.17.

     (b) Upon the sending of a notice in accordance with Section 11.02(b) of the
Master Participation Agreement that such Event of Political Force Majeure has
ceased, the Administrative Agent shall promptly send a notice to the Trustee and
the Borrower directing the Trustee and the Borrower to no longer apply funds in
the Accounts as contemplated in Section 4.17.


                                       41

                                   ARTICLE VI

                           INTERCREDITOR ARRANGEMENTS

     6.01 Appointment of the Appointed Parties.

     (a) The Borrower and the Senior Lenders hereby appoint Citibank, N.A.,
acting through its corporate trust office, as Trustee hereunder and under each
other Financing Document to which the Trustee is a party and Citibank, N.A.
hereby accepts such appointment upon the terms and conditions hereof and of each
such other Financing Document to which it is a party.

     (b) The Senior Lenders hereby appoint Calyon as Administrative Agent
hereunder and under each other Financing Document to which the Administrative
Agent is a party and Calyon hereby accepts such appointment upon the terms and
conditions hereof and of each such other Financing Document to which it is a
party.

     (c) The Senior Lenders hereby appoint Citibank, N.A. as Offshore Collateral
Agent hereunder and under each other Financing Document to which the Offshore
Collateral Agent is a party and Citibank, N.A. hereby accepts such appointment
upon the terms and conditions hereof and of each such other Financing Document
to which it is a party.

     (d) The Senior Lenders hereby appoint Citibank del Peru S.A. as Onshore
Collateral Agent hereunder and under each other Financing Document to which the
Onshore Collateral Agent is a party and Citibank del Peru S.A. hereby accepts
such appointment upon the terms and conditions hereof and of each such other
Financing Document to which it is a party.

     6.02 Authority to Act.

     (a) Subject to Section 6.03, the Administrative Agent shall have the right
and authority with full power of substitution to take any and all Senior Lenders
Action for and on behalf of the Senior Lenders.

     (b) Each Senior Lender hereby authorizes and directs the Offshore
Collateral Agent to execute and deliver the Offshore Security Documents to which
the Offshore Collateral Agent is or becomes a party. Subject to Section 6.04,
the Offshore Collateral Agent shall have the right and authority with full power
of substitution to take any and all other Offshore Collateral Agent Action on
behalf of the Senior Lenders.

     (c) Each Senior Lender hereby authorizes and directs the Onshore Collateral
Agent to execute and deliver the Onshore Security Documents to which the Onshore
Collateral Agent is or becomes a party. Subject to Section 6.05, the Onshore
Collateral Agent shall have the right and authority with full power of
substitution to take any and all Onshore Collateral Agent Action on behalf of
the Senior Lenders.

     6.03 Senior Lenders Actions. Except as otherwise provided herein or in the
Completion Guarantee, any Senior Lenders Action shall be made or taken only by
the Administrative Agent and only in accordance with the provisions of this
Section 6.03:


                                       42

     (a) All calculations and determinations to be made by the Administrative
Agent pursuant to Article IV shall be taken or made at the discretion of the
Administrative Agent.

     (b) The Administrative Agent shall take the following Senior Lender Actions
pursuant to (and only pursuant to) instructions from each Senior Facility Lender
and the Common Representative.

          (i) To enter into any Material Financing Document Amendment with
     respect to any of the Senior Lender Financing Documents;

          (ii) To take any action to preserve, enforce or collect Senior Loans
     Obligations pursuant to Section 5.07(d)(i);

          (iii) To consent to Borrower's assignment or transfer of its rights or
     obligations under this Agreement pursuant to Section 9.08;

          (iv) To waive Completion conditions and declare a Full Completion or
     Partial Completion pursuant to Section 2.04 of the Completion Guarantee;

          (v) To take any action to preserve, enforce or collect Guaranteed
     Obligations pursuant to Section 8.07(d)(i) of the Completion Guarantee;

          (vi) To consent to assignment or transfer by any of the Parent
     Companies of its rights or obligations under the Completion Guarantee
     pursuant to Section 9.09(a) of the Completion Guarantee.

          (vii) To rescind and annul any termination or cancellation of any
     commitment or any acceleration pursuant to Section 5.01(c)(ii).

     (c) The following Senior Lenders Actions shall be taken by the
Administrative Agent pursuant to (and only pursuant to) a Supermajority Vote:

          (i) To terminate all Commitments and accelerate all Senior Loans
     Obligations (x) 30 days after the occurrence of a Borrower Payment Event of
     Default, a Borrower Abandonment Event of Default or a Borrower Completion
     Event of Default, (y) 30 days after the occurrence of a Borrower
     Expropriation Event of Default and (z) 180 days after the occurrence of any
     other Borrower Event of Default;

          (ii) To take any Borrower Enforcement Action in the circumstances
     contemplated under Section 5.02(a)(i), Section 5.02(b)(i) and Section
     5.02(c)(i);

          (iii) To remove an Appointed Party pursuant to Section 7.06(b);

          (iv) To determine the compensation of any of the Appointed Parties
     pursuant to Section 7.08;

          (v) To agree to a Debt Buy-Down Closing Date with the Borrower
     pursuant to Section 3.03(c) of the Completion Guarantee;


                                       43

          (vi) To consent to any Person as an Acceptable Issuer or Acceptable
     Guarantor, as set forth in the definitions of such terms;

          (vii) To consent to the addition of proposed investments to the list
     of Permitted Investment as set forth in the definitions of such term; and

          (viii) To create, accept and execute any Senior Lenders Financing
     Document and any and all amendment, modification, change, supplement or
     waiver of any of the Senior Lenders Financing Documents, that is not a
     Material Financing Document Amendment.

     (d) The following Senior Lenders Actions shall be taken by the
Administrative Agent pursuant to (and only pursuant to) instructions from the
Majority Lenders:

          (i) To proceed to obtain the registration of security interests as
     contemplated in Section 3.09(c);

          (ii) To direct the investment of funds in the Accounts and to direct
     foreign exchange transactions pursuant to Sections 4.20(a), 4.21, and
     5.01(a)(iv);

          (iii) To request information from the Trustee or the Borrower pursuant
     to Section 4.25; (iv) To exercise the first stage remedies set forth in
     Section 5.01(a)(iii) through (vii);

          (v) To terminate all Commitments and accelerate all Senior Loans
     Obligations (x) 90 days after the occurrence of a Borrower Payment Event of
     Default, a Borrower Abandonment Event of Default or a Borrower Completion
     Event of Default, (y) 90 days after the occurrence of a Borrower
     Expropriation Event of Default and (z) 360 days after the occurrence of any
     other Borrower Event of Default;

          (vi) To rescind and annul any termination or cancellation of any
     commitment or any acceleration pursuant to Section 5.01(c)(i);

          (vii) To take any Borrower Enforcement Action in the circumstances
     contemplated under Sections 5.02(a)(ii), 5.02(b)(ii) and 5.02(c)(ii);

          (viii) To instruct the Borrower or the Trustee to apply funds in the
     Accounts in the event of Political Force Majeure pursuant to Section 5.10;

          (ix) To object to the proposed successor for an Appointed Party
     proposed by the Borrower or to appoint such a successor pursuant to Section
     7.06(c);

          (x) To notify in writing the Parent Companies of the existence and
     amount of a funding cash shortfall pursuant to Section 3.02(a) of the
     Completion Guarantee;


                                       44

          (xi) To notify the Parent Companies of the Senior Lenders' intention
     to commence an arbitration proceeding to contest the Parent Companies'
     declaration of an Event of Political Force Majeure pursuant to Section 5.04
     of the Completion Guarantee;

          (xii) To notify the Parent Companies of the breach of a representation
     or warranty under Section 8.01(b) of the Completion Guarantee;

          (xiii) To notify the Parent Companies of the breach of a covenant
     pursuant to Section 8.01(c) of the Completion Guarantee;

          (xiv) To declare a PC Event of Default pursuant to Sections 8.03(b) of
     the Completion Guarantee;

          (xv) To request a Defaulting Parent Company to immediately pay its Pro
     Rata Share of all Senior Lenders' Outstanding Advance Amounts under
     Sections 8.05(a) and 8.05(c) of the Completion Guarantee;

          (xvi) To request the Administrative Agent to take PC Enforcement
     Actions as required under clauses (i) and (iii) of Section 8.05(d) of the
     Completion Guarantee;

          (xvii) To appoint an arbitrator pursuant to Section 9.16(b) of the
     Completion Guarantee; and

          (xviii) Any other Senior Lenders Action that is not otherwise
     described in this Section 6.03 or with respect to which no specific
     approval requirement has been set forth in any other Sections of this
     Agreement or the Completion Guarantee.

     (e) Upon instructions from any Senior Lender the Administrative Agent
shall:

          (i) Request information or reports relating to the Proceeds Account
     pursuant to Section 4.23(c);

          (ii) Convene a meeting of Senior Lenders, as contemplated in Section
     6.10; and

          (iii) Declare a PC Event of Default pursuant to Section 8.03(a) of the
     Completion Guarantee.

     (f) The Administrative Agent shall commence a Completion Arbitration, as
contemplated in Section 2.03(b) of the Completion Guarantee pursuant to (and
only pursuant to) instructions from any three Senior Lenders.

     (g) The following Senior Lender Actions shall be taken by the
Administrative Agent pursuant to (and only pursuant to) instructions from (A)
(x) prior to the Availability Period End Date, Senior Lenders representing at
least 20% of the Aggregate Committed Amounts and the Aggregate Issued Bond
Amount and (y) after the Availability Period End Date, Senior Lenders holding
Senior Loans with an Outstanding Advance Amount equal to at least 20% of the


                                       45

Outstanding Advance Amount of the Senior Loans held by all Senior Lenders, and
(B) at least two (2) Senior Lenders:

          (i) To terminate all Commitments and accelerate all Senior Loans
     Obligations 225 days after the occurrence of a Borrower Payment Event of
     Default, a Borrower Abandonment Event of Default or a Borrower Completion
     Event of Default; and

          (ii) To take any Borrower Enforcement Action in the circumstances
     contemplated under Sections 5.02(a)(iii).

     6.04 Certain Actions by the Offshore Collateral Agent. Any Offshore
Collateral Agent Action, which shall not have been permitted to be made or taken
under any other Section of this Agreement, shall be made or taken only in
accordance with the provisions of this Section 6.04:

          (a) Any Offshore Collateral Agent Action that is a Material Financing
     Document Amendment shall be taken by the Offshore Collateral Agent pursuant
     to (and only pursuant to) instructions from the Administrative Agent.

          (b) Any Offshore Collateral Agent Action to be taken in respect of any
     Routine Matter shall be as set forth herein, or any other Financing
     Document to which the Offshore Collateral Agent is a party or as the
     Administrative Agent may direct.

          (c) Any other Offshore Collateral Agent Action (not described in
     clauses (a) or (b) above) shall be made or taken by the Offshore Collateral
     Agent pursuant to (and only pursuant to) the prior instructions of the
     Administrative Agent.

     6.05 Certain Actions by the Onshore Collateral Agent. Any Onshore
Collateral Agent Action, which shall not have been permitted to be made or taken
under any other Section of this Agreement, shall be made or taken only in
accordance with the provisions of this Section 6.05:

          (a) Any Onshore Collateral Agent Action that is a Material Financing
     Document Amendment shall be taken by the Onshore Collateral Agent pursuant
     to (and only pursuant to) instructions from the Administrative Agent.

          (b) Any Onshore Collateral Agent Action to be taken in respect of any
     Routine Matter shall be as set forth herein or any other Financing Document
     to which the Onshore Collateral Agent is a party or as directed by the
     Administrative Agent.

          (c) Any other Onshore Collateral Agent Action (not described in
     clauses (a) or (b) above) shall be made or taken by the Onshore Collateral
     Agent pursuant to (and only pursuant to) the prior instructions of the
     Majority Lenders.

     6.06 Sharing of Non-Pro Rata Payments.

     (a) Each Senior Lender agrees that in the event any Senior Lender shall,
after giving effect to any incremental payment for Indemnified Tax withholding,
obtain payment of any amounts due to it on or in respect of Senior Loans
Obligations, whether through exercise of a right of set-off, banker's lien or
counterclaim or from any security or from any realization


                                       46

(whether through attachment, foreclosure or otherwise) of assets of the Borrower
or the Parent Companies or otherwise, and such payment is not a Pro Rata
Payment, then, such Senior Lender shall promptly remit to the Administrative
Agent for distribution to the other Senior Lenders the amount of such payment
necessary to ensure that each Senior Lender shall have received a Pro Rata
Payment, provided that this provision shall not apply with respect to any
prepayment of the outstanding Stand-By Amount of the Commercial Banks out of the
proceeds of an issuance of Peruvian Bonds and any prepayment of the Outstanding
Advance Amounts of the Senior Facility Lenders.

     (b) The Borrower consents and agrees that any Senior Lender that has
received a payment that is not a Pro Rata Payment and has remitted the amount of
such payment to other Senior Lenders pursuant to this Section shall be deemed to
have received payment only of the amount received by such Senior Lender after
redistribution by such Senior Lender to other Senior Lenders, and any Senior
Lender that has received a payment pursuant to this Section from another Senior
Lender shall be deemed to have been paid such amount by the Borrower.

     6.07 Administrative Agent as Agent. For all purposes of this Agreement, the
Master Participation Agreement, the Completion Guarantee, the Transfer
Restrictions Agreement and the Security Documents, the Administrative Agent
shall represent and act as agent for the Senior Facility Lenders and the Senior
Lenders, including for the following purposes: (i) to give or receive any
notice, certificate, request, demand or other communication permitted or
required to be given or received hereunder or thereunder, (ii) to take any
Senior Facility Lenders Action or Senior Lenders Action, as the case may be,
required or permitted to be taken by a Senior Facility Lender hereunder or
thereunder and (iii) to direct the Collateral Agents. All of such notices,
certificates, requests, demands, or other communications shall be given, any
such votes shall be cast and all of such actions shall be taken by such
Administrative Agent, acting for all Senior Facility Lenders or Senior Lenders,
as the case may be, acting together as a group. All the MSA Parties shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of any Senior Lender made or given by the Administrative Agent.

     6.08 Attorney-in-Fact.

     (a) The Onshore Collateral Agent and the Offshore Collateral Agent, or any
officer or agent thereof, with full power of substitution for the Onshore
Collateral Agent or the Offshore Collateral Agent, as the case may be, is hereby
appointed the attorney-in-fact of the Borrower for the purpose of carrying out
the provisions of each of the Financing Documents and taking any action and
executing any instruments which the Administrative Agent may deem necessary or
advisable to accomplish the purposes hereof and thereof to the extent that the
Offshore Collateral Agent and the Onshore Collateral Agent are authorized or
directed to take such action or execute such instrument pursuant to the terms
hereof and thereof, which appointment as attorney-in-fact is coupled with an
interest and is irrevocable and, without limiting the generality of the
foregoing, which appointment hereby gives the Onshore Collateral Agent or the
Offshore Collateral Agent, as the case may be, the power and right on behalf of
the Borrower, without notice to or assent by any of the foregoing, to the extent
permitted by applicable law, to do the following when and to the extent it is
authorized or directed to do so pursuant to the terms of this Agreement or any
of the other Financing Documents:


                                       47

          (i) to ask for, demand, sue for, collect, receive and give acquittance
     for any and all moneys due or to become due with respect to the Collateral;

          (ii) to receive, take, endorse, assign and deliver any and all checks,
     notes, drafts, acceptances, documents and other negotiable and
     non-negotiable instruments, documents and chattel paper taken or received
     by the Offshore Collateral Agent in connection with this Agreement or any
     of the other Financing Documents;

          (iii) to commence, file, prosecute, defend, settle, compromise or
     adjust any claim, suit, action or proceeding with respect to the
     Collateral;

          (iv) to sell, transfer, assign or otherwise deal in or with the
     Collateral or any part thereof pursuant to the terms and conditions of the
     Agreement and the other Financing Documents; and

          (v) to do, at the option of the Administrative Agent and at the
     expense and for the account of the Borrower at any time or from time to
     time, all acts and things which the Administrative Agent deems necessary to
     protect or preserve the Collateral and to realize upon the Collateral;

provided, that (A) neither the Onshore Collateral Agent nor the Offshore
Collateral Agent shall exercise any of its rights under this power of attorney
prior to a Borrower Enforcement Direction and (B) prior to exercising such
rights, the Onshore Collateral Agent or the Offshore Collateral Agent, as the
case may be, shall notify the Borrower of its receipt of such Borrower
Enforcement Direction and the contents thereof.

     (b) The Borrower agrees to execute and deliver to the Onshore Collateral
Agent or the Offshore Collateral Agent, as the case may be, and register in
every public registry in Peru in which such registration is necessary, if any, a
notarized public deed constituting such power of attorney. Annually prior to the
anniversary date hereof, the Borrower must renew such power of attorney and such
registration. Neither the Onshore Collateral Agent nor the Offshore Collateral
Agent shall be responsible for the negligence or misconduct of any
attorney-in-fact selected by it without gross negligence or willful misconduct.

     6.09 Senior Lenders Vote and Senior Facility Lenders' Vote. For all
purposes under this Agreement and under any other Financing Document:

     (a) Each of the KfW Lender, Calyon Lender, RBS Lender, Scotia Capital
Lender and Mizuho Lender shall each have one Senior Lenders Vote and Senior
Facility Lenders Vote.

     (b) The Peruvian Bondholders shall count as a single Senior Lender and
shall have one Senior Lenders Vote, except as contemplated under paragraph (f)
below. The Common Representative, acting pursuant to the terms of the Peruvian
Bonds Indenture, shall make all decisions to be made by the Peruvian
Bondholders, exercise all rights to be exercised by Peruvian Bondholders
hereunder and under the Completion Guarantee and cast the Senior Lenders Vote of
the Peruvian Bondholders.


                                       48

     (c) JBIC shall have three Senior Lenders Votes and three Senior Facility
Lenders Votes, except that if JBIC is replaced by a Replacement Lender in
accordance with the Master Participation Agreement, the votes of JBIC shall be
transferred to such Replacement Lender.

     (d) Votes to be cast by a certain percentage of the Aggregate Committed
Amount or Outstanding Advance Amount of the Senior Facility Lenders or Senior
Lenders, shall be cast by the respective Senior Facility Lenders or Senior
Lenders individually, except that:

          (i) JBIC shall have the right to vote its Aggregate Committed Amounts
     or Aggregate Base Advance Amounts, as the case may be, corresponding to the
     JBIC Tranche A Advance and the JBIC Tranche B Advance separately;

          (ii) JBIC shall have the right to split its vote with respect to its
     Aggregate Committed Amount or Aggregate Base Advance Amount, as the case
     may be, corresponding to the JBIC Tranche B Advance in two separate votes;
     and

          (iii) The Peruvian Bondholders shall vote as a block and the vote of
     the Peruvian Bondholders shall be cast by the Common Representative acting
     pursuant to the terms of the Peruvian Bonds Indenture.

     (e) In connection with each vote to be cast by a certain percentage of the
Outstanding Advance Amount of the Senior Lenders, for the purpose of counting
the votes of the Peruvian Bondholders, after the Availability Period End date,
the Outstanding Advance Amount of the Peruvian Bondholders shall be capped at an
amount equal to 30% of the Outstanding Advance Amount of all Senior Loans,
provided that this cap shall no longer be applicable if the Outstanding Advance
Amount of the Peruvian Bondholders exceeds 66 2/3rd% of the Outstanding Advance
Amount of all Senior Loans.

     (f) Following repayment in full of all Senior Facility Loans, the Peruvian
Bondholders shall be treated as having eight (8) Senior Lenders Votes.

     (g) Senior Facility Loans held by a Parent Company or an Affiliate of a
Parent Company shall be non voting for all purposes hereunder and under the MPA.

     6.10 Meetings of Senior Lenders. Any Senior Lender (or in the case of
Peruvian Bondholders, the Common Representative on behalf of the Peruvian
Bondholders) may at any time request the Administrative Agent to convene a
meeting of Senior Lenders. The Senior Lender requesting such meeting shall give
notice thereof to the Administrative Agent.

                                   ARTICLE VII

                   PROVISIONS COMMON TO THE APPOINTED PARTIES

     7.01 Delivery of Documentation. Executed counterparts of each Financing
Document required to be executed and delivered at or prior to the date of this
Agreement have been delivered to each Appointed Party and each Appointed Party
acknowledges receipt thereof. The Borrower and each Senior Lender agree to
deliver to each Appointed Party each Financing Document which is executed and
delivered by it subsequent to the date of this Agreement


                                       49

promptly upon such execution and delivery and to deliver each instrument
amending or modifying any agreement previously delivered to such Appointed
Party. Amendments or modifications of the aforementioned agreements shall not
affect the duties and obligations of any of the Appointed Parties hereunder
unless such Appointed Party has consented to such amendment or modification.

     7.02 Reliance. Each Appointed Party shall be entitled to act upon any
notice, certificate, instrument, demand, request, direction, instruction,
waiver, receipt, consent or other document or communication furnished hereunder
or under any other Financing Document which it in good faith believes to be
genuine, and it shall be entitled to rely conclusively upon the due execution,
validity and effectiveness, and the truth and acceptability of any provisions
contained therein. No Appointed Party shall have any responsibility to make any
investigation into the facts or matters stated in any notice, certificate,
instrument, demand, request, direction, instruction, waiver, receipt, consent or
other document or communication furnished to it hereunder or under any other
Financing Document. Each Appointing Party hereto shall deliver to each of its
Appointed Parties an Incumbency Certificate setting forth its authorized
signatories of any notice, certificate, instrument, demand, request, direction,
instruction, waiver, receipt, consent or other document or communication
furnished to it hereunder or under any other Financing Document, and each
Appointed Party shall be entitled to conclusively rely on such list until a new
list is furnished by the relevant Appointing Party to such Appointed Party.

     7.03 Liability. No Appointed Party shall be liable for any error of
judgment or for any act done or omitted to be done by it in good faith or for
any mistake of fact or law, or for anything which it may do or refrain from
doing, except for its own gross negligence or willful misconduct. No Appointing
Party shall be liable for any act done or omitted to be done by any Appointed
Party or by any of the Appointed Party's officers or employees.

     7.04 Consultation with Counsel, etc. Each Appointed Party may consult with,
and obtain advice from, legal counsel, accountants, engineers and other experts,
in connection with the performance of its duties hereunder and under any other
Financing Document and it shall incur no liability and shall be fully protected
in acting in good faith in accordance with the opinion and advice of such
counsel, accountants and other experts (as to matters within any such expert's
field of expertise). No Appointed Party shall be responsible for the negligence
or misconduct of any counsel, accountants, engineers and other experts selected
by it without gross negligence or willful misconduct on its part.

     7.05 Duties. Each Appointed Party shall have no duties other than those
specifically set forth or provided for in this Agreement and each other
Financing Document to which it is a party and no implied covenants or
obligations of such Appointed Party shall be read into this Agreement or any
other Financing Document or any related agreement to which it is a party. Each
Appointed Party shall have no obligation to familiarize itself with and shall
have no responsibility with respect to any other agreement or document relating
to the transactions contemplated by this Agreement and the Financing Documents
(except to the extent that action authorized or required to be taken by such
Appointed Party hereunder or under any other Financing Document to which it is a
party reasonably requires such Appointed Party so to familiarize itself) nor any
obligation to inquire whether any notice, certificate, instrument, demand,
request, direction, instruction, waiver, receipt, consent, document,
communication,


                                       50

statement or calculation is in conformity with the terms of any such other
agreement, except those irregularities or errors manifestly apparent on the face
of such document or actually known to such Appointed Party. If, however, any
remittance or communication received by an Appointed Party appears manifestly
erroneous or irregular, such Appointed Party shall be under a duty to make
prompt inquiry to the Person originating such remittance or communication in
order to determine whether a clerical error or inadvertent mistake has occurred.

     7.06 Resignation, Replacement and Successor.

     (a) Each Appointed Party at any time may resign hereunder and under the
other Financing Documents upon giving not less than two months' notice in
writing to the Borrower and the Administrative Agent or to the Borrower in case
of resignation by the Administrative Agent.

     (b) Each Appointed Party may be removed hereunder and under the other
Financing Documents by an instrument in writing signed by the Administrative
Agent (acting pursuant to a Supermajority Vote) and, if no Borrower Event of
Default has occurred and is Continuing, the Borrower.

     (c) Upon resignation or removal of an Appointed Party, a successor (i) if
no Borrower Event of Default has been declared and is Continuing, shall be
proposed by the Borrower and, if consented to by the Administrative Agent
(acting upon instructions from the Majority Lenders), shall be appointed by the
relevant Appointing Parties, or (ii) if a Borrower Event of Default has been
declared and is Continuing, or if the Borrower fails within 30 days after
receipt of notice of the resignation or removal of such Appointed Party to
propose a successor, shall be appointed by the Administrative Agent (acting upon
instructions from the Majority Lenders).

     (d) No resignation or removal of an Appointed Party and no appointment of a
successor shall be effective until (i) the successor has accepted its
appointment and (ii) all indemnities, compensation and expenses required by
Sections 7.07 and 7.08 hereof shall have been paid or provided.

     (e) If no successor to an Appointed Party shall have been so appointed and
shall have accepted such appointment within 30 days after the date fixed for
such resignation or such removal, the Appointed Party that has resigned or is
removed may petition any court of competent jurisdiction for the appointment of
a successor. Such court may thereupon, after such notice, if any, as it may
prescribe, appoint a successor. Any court-appointed successor Appointed Party
shall automatically be replaced by a successor Appointed Party subsequently
appointed by relevant MPA Parties pursuant to this Section 7.06. Any successor
appointed pursuant to this Section 7.06 shall be (i) in the case of the Onshore
Collateral Agent, a bank or trust company organized under the laws of Peru
having its principal corporate trust office in Lima and a combined capital and
surplus of at least U.S.$100,000,000 and (ii) in the case of the Administrative
Agent, a bank or trust company having a combined capital and surplus of at least
U.S.$200,000,000 and (iii) in the case of any other Appointed Party, a bank or
trust company organized under the laws of the United States or of the State of
New York having its principal


                                       51

corporate trust office in The City of New York and a combined capital and
surplus of at least U.S.$200,000,000.

     (f) Any successor to an Appointed Party shall evidence its acceptance of
its appointment hereunder by executing and delivering to the Borrower and the
Administrative Agent an instrument accepting its appointment for its role
hereunder and under the other Financing Documents, and thereupon such successor
Appointed Party, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations of its predecessor
hereunder and under the other Financing Documents with like effect as if
originally named as Appointed Party herein and therein in lieu of its
predecessor, and such predecessor shall have no further obligation or liability
thereunder except for liability with respect to its acts or omissions prior to
such succession pursuant to Section 7.03 hereof; nevertheless, on the request of
any party hereto or such successor Appointed Party, the Appointed Party ceasing
to act as such shall execute and deliver instruments transferring to such
successor all of its rights and powers hereunder and under the other Financing
Documents, including, if applicable, any such instruments necessary to transfer
the Accounts to such successor Appointed Party, and shall deliver to such
successor Appointed Party all property held by it in trust hereunder.

     7.07 Indemnity.

     (a) Without limiting the obligations of the Borrower under Section 12.21 of
the MPA and without duplication thereof, the Borrower agrees to indemnify the
Trustee, the Administrative Agent and the Collateral Agents, and to hold each of
them and their officers, directors, agents and employees harmless against, any
loss, liability, claim, judgment, settlement, compromise, obligation, damage,
penalty, or reasonable cost, expense and disbursement of any kind or nature
whatsoever (collectively, "Losses") with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, and each other
Financing Document, unless arising from the gross negligence, bad faith or
willful misconduct of such Appointed Party, or the officers, directors, agents
and employees that are seeking indemnification, including the reasonable costs
and expenses of defending itself and themselves against any claim of liability
in the premises.

     (b) Each of the Senior Lenders, ratably in accordance with its pro rata
share of the then aggregate Outstanding Advance Amount, agrees to indemnify the
Trustee, the Collateral Agents and the Administrative Agent and to hold each of
them and their officers, directors, agents and employees harmless against any
loss, liability, claim, judgment, settlement, compromise, obligation, damage,
penalty or reasonable cost, expense and disbursement of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement and the other Financing Documents, unless
arising from the gross negligence, bad faith or willful misconduct of such
Appointed Party, as the case may be, or the officers, directors, agents and
employees that are seeking indemnification, including the reasonable costs and
expenses of defending itself and themselves against any claim of liability in
the premises. Notwithstanding the foregoing, no Peruvian Bondholder shall be
required to make any out of pocket disbursement on account of such
indemnification obligation.


                                       52

     (c) As security for such payment and the payments referred to in this
Section 7.07, the Collateral Agents shall have a lien equal to the Senior Loans
upon all Collateral and other property and funds held or collected by each
Collateral Agent as part of the trust established hereunder. Upon its
resignation or removal, each Collateral Agent, as the case may be, shall be
entitled to the prompt payment by the Borrower of its compensation and
indemnification for the services rendered under this Agreement and the other
Financing Documents, and to reimbursement of all reasonable out-of-pocket
expenses up to the date of resignation or removal (including the reasonable fees
and expenses of counsel, if any) incurred in connection with the performance of
such services.

     (d) The indemnification provision for the benefit of the Appointed Parties
acting in such capacity shall survive the termination of the other provisions of
this Agreement and the resignation or removal of such Appointed Party.

     7.08 Compensation. Each Appointed Party shall be entitled to such
compensation (which shall not be limited by any provision of law in regard to
compensation of a trustee of an express trust) as may be agreed from time to
time between the Borrower, the Administrative Agent acting pursuant to a
Supermajority Vote and such Appointed Party for all services rendered under this
Agreement and the other Financing Documents, and such compensation, together
with reimbursement for disbursements and expenses in connection with the
performance by such Appointed Party of its role (including the reasonable fees
and expenses of its agents and of counsel, accountants, engineers and other
experts referred to in Section 7.04 hereof), shall be paid by the Borrower (free
and clear of and without deduction by reason of any Peruvian taxes or other
impositions).

     7.09 Certificates. Whenever an Appointed Party shall deem it necessary or
desirable that a matter be proved or established in connection with taking or
omitting any action by it hereunder or under any other Financing Document, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of gross negligence or willful misconduct on the
part of such Appointed Party, be deemed to be conclusively proved or established
by a certificate of the Borrower or the Administrative Agent acting pursuant to
instructions from the Requisite Lenders (determined based on the underlying
matter) delivered to such Appointed Party.

     7.10 Merger of Appointed Party. Any corporation into which an Appointed
Party shall be merged, or with which it shall be consolidated, or any
corporation resulting from any merger or consolidation to which an Appointed
Party shall be a party, shall replace such Appointed Party under each Financing
Document without the execution or filing of any paper or any further act on the
part of the MPA Parties and the disappearing Appointed Party shall promptly give
the Administrative Agent and the Borrower notice thereof; provided such
resulting or surviving corporation, as the case may be, shall immediately resign
as an Appointed Party hereunder if it would not have been eligible to act as a
successor to the disappearing Appointed Party in accordance with the provisions
of Section 7.06 hereof.


                                       53

     7.11 Appointed Parties in Their Individual Capacity. Each Appointed Party
may make loans to the Borrower, including Senior Facility Loans, accept deposits
from and generally engage in any kind of business with the Borrower as though
such Appointed Party were not an Appointed Party hereunder and under the other
Financing Documents.

     7.12 Miscellaneous.

     (a) In the event of any disagreement among the Appointing Parties arising
in circumstances where an Appointed Party is to take or refrain from taking any
action under this Agreement or any other Financing Agreement, if the terms of
this Agreement or the relevant Financing Agreement do not unambiguously mandate
the action the Appointed Party is to take or not to take under the circumstances
then existing, or if the Appointed Party is in doubt as to what action it is
required to take or not to take or as to how to take any such action, the
Appointed Party shall be entitled to refrain from taking any action until
directed otherwise in writing by (i) (x) in the case of the Trustee, the
Borrower and the Administrative Agent acting pursuant to instructions from the
Requisite Lenders (determined based on the underlying matter) prior to a
Borrower Event of Default or the Administrative Agent acting pursuant to
instructions from the Requisite Lenders (determined based on the underlying
matter) after a Borrower Event of Default and (y) in the case of any other
Appointed Party, the Administrative Agent acting pursuant to instructions from
the Requisite Lenders (determined based on the underlying matter) (unless
inconsistent with any direction of a court of competent jurisdiction) or (ii) a
court of competent jurisdiction, and the Appointed Party shall not, in each
case, incur any liability in acting or refraining from acting on ambiguous
instructions or until otherwise directed in writing in accordance with this
Section 7.12.

     (b) None of the provisions of any Financing Document shall be construed to
require any Appointed Party to expend or risk its own funds or otherwise to
incur any personal financial liability in the performance of any of its duties
hereunder or thereunder. No Appointed Party shall be under any obligation to
exercise any of the rights or powers vested in it by any Financing Document at
the request or direction of its Appointing Parties, unless such Appointed Party
shall have been offered security or indemnity or other arrangement to reimburse
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction (including
interest thereon from the time incurred until reimbursed).

     7.13 Exculpatory Provisions. The Offshore Collateral Agent and the Onshore
Collateral Agent make no representations as to the value or condition of the
trust created hereunder or any part thereof, or as to the title of the Borrower
thereto, or as to the rights and interests granted or the security afforded by
this Agreement or any other Financing Document, or (except by or with respect to
itself) as to the validity, execution, enforceability, legality or sufficiency
of this Agreement, any other Financing Document or the Senior Facility Loans
secured hereby, and each of the Offshore Collateral Agent and the Onshore
Collateral Agent (in its individual and trust capacities) shall incur no
liability or responsibility in respect of any such matters.


                                       54

     7.14 Miscellaneous.

     (a) In the absence of actual knowledge of a Responsible Officer of the
Offshore Collateral Agent or the Onshore Collateral Agent, the Offshore
Collateral Agent or the Onshore Collateral Agent, as the case may be, will not
be deemed to have knowledge of any Borrower Event of Default, unless notified
thereof in writing by the Borrower or any Secured Party.

     (b) The rights, benefits, privileges and immunities given to the Offshore
Collateral Agent hereunder shall extend to, and be enforceable by, the Trustee
and by each agent attorney or other Person employed to act hereunder.

     (c) In any circumstance where a Collateral Agent is required to exercise
discretion, approve documentation, release Collateral or distribute proceeds
under any Financing Document, the Collateral Agent may, at its option, seek to
obtain instructions or directions from the Administrative Agent with respect to
such action. If a Collateral Agent so elects, then it may refrain from taking
such action until such directions or instructions are received and shall have no
liability to the Secured Parties or the Borrower for so refraining.

     (d) Anything in the Financing Documents to the contrary notwithstanding, in
no event shall the Trustee, the Administrative Agent or the Collateral Agents be
liable under or in connection with the Financing Documents for indirect,
special, incidental, punitive or consequential losses or damages of any kind
whatsoever.

     (e) In no event shall the Trustee, the Administrative Agent or the
Collateral Agents be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly
or indirectly, forces beyond its control, including without limitation strikes,
work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of god, and interruptions,
loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee, the Administrative
Agent or the Collateral Agents shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.

     7.15 Assignment of Rights, Not Assumption of Duties. Anything herein
contained to the contrary notwithstanding, none of the Secured Parties shall be
obligated to perform any of the obligations or duties of the Borrower under any
of the Financing Documents to which the Borrower is a party or, except as
expressly provided herein with respect to the Trustee, the Administrative Agent
or the Onshore Collateral Agents to take any action to collect or enforce any
claim for payment assigned hereunder or otherwise.

     7.16 Appointment of Sub-Agent of the Offshore Collateral Agent or the
Onshore Collateral Agent.

     (a) Notwithstanding any other provisions of this Agreement, at any time,
for the sole purpose of meeting any legal requirement of any jurisdiction in
which any Collateral may at the time be located, each of the Offshore Collateral
Agent and the Onshore Collateral Agent shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as its agent or
sub-trustee of all or any part of the Collateral, and to vest in such Person or


                                       55

Persons, in such capacity and for the benefit or on behalf of the Secured
Parties, such title to the Collateral, or any part thereof, and subject to the
other provisions of this Section 7.16, such powers, duties, obligations, rights
and trusts as the Offshore Collateral Agent or the Onshore Collateral Agent, as
the case may be, may consider necessary or desirable, provided that the
appointment of such agent or sub-trustee shall be subject to the approval of the
Borrower and the Administrative Agent prior to the occurrence of a Borrower
Event of Default and the Administrative Agent, after the occurrence of a
Borrower Event of Default, which approval, in each case, shall not be
unreasonable withheld, and provided further, that any such agent or sub-trustee
shall agree to be liable to the Secured Parties to the extent the Offshore
Collateral Agent or the Onshore Collateral Agent, as the case may be, is so
liable pursuant to this Agreement.

     (b) All rights and powers, conferred or imposed upon the Offshore
Collateral Agent or the Onshore Collateral Agent, as the case may be, may be
conferred or imposed upon and may be exercised or performed by an agent or
sub-trustee.

     (c) Any notice, request or other writing given to the Offshore Collateral
Agent or the Onshore Collateral Agent, as the case may be, shall be deemed to
have been given to each of the agents or sub-trustees, as effectively as if
given to each of them. Every instrument appointing any agents or sub-trustees
shall refer to this Agreement and the conditions of this Article.

     (d) Any agent or sub-trustee may at any time appoint the Offshore
Collateral Agent or the Onshore Collateral Agent, as the case may be, as its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any agent or sub-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Offshore
Collateral Agent or the Onshore Collateral Agent, as the case may be, to the
extent permitted by law, without the appointment of a new or successor Offshore
Collateral Agent or Onshore Collateral Agent, as the case may be.

     7.17 Limitation on Duty of Collateral Agents in Respect of Collateral;
Indemnification.

     (a) Beyond the exercise of reasonable care in the custody thereof, the
Collateral Agents shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any income
thereon or as to preservation of rights against prior parties or any other
rights pertaining thereto and the Collateral Agents shall not be responsible for
filing any financing or continuation statements or recording any documents or
instruments in any public office at any time or times or otherwise perfecting or
maintaining the perfection of any security interest in the Collateral. The
Collateral Agents shall be deemed to have exercised reasonable care in the
custody of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which it accords its own property and
shall not be liable or responsible for any loss or diminution in the value of
any of the Collateral, by reason of the act or omission of any carrier,
forwarding agency or other agent or bailee selected by the Collateral Agents in
good faith.


                                       56

     (b) The Collateral Agents shall not be responsible for the existence,
genuineness or value of any of the Collateral or for the validity, perfection,
priority or enforceability of the Liens in any of the Collateral, whether
impaired by operation of law or by reason of any of any action or omission to
act on its part hereunder, except to the extent such action or omission
constitutes gross negligence, bad faith or willful misconduct on the part of the
Collateral Agents, for the validity or sufficiency of the Collateral or any
agreement or assignment contained therein, for the validity of the title of the
Borrower to the Collateral, for insuring the Collateral or for the payment of
taxes, charges, assessments or Liens upon the Collateral or otherwise as to the
maintenance of the Collateral.

                                  ARTICLE VIII

             REPRESENTATIONS AND WARRANTIES OF THE APPOINTED PARTIES

     For the purpose of this Agreement and any other Financing Document, each
Appointed Party hereby represents and warrants to the Borrower and to each
Senior Lender that as of the date hereof:

     8.01 Due Incorporation; Power.

     (a) It is a corporation duly authorized and validly existing under the laws
of its jurisdiction of incorporation.

     (b) It has the full power, authority and legal right to execute, deliver
and perform and observe the terms of this Agreement and any other Financing
Document to which it is a party; and all necessary legal and corporate action
has been taken to authorize such Appointed Party to execute, deliver and perform
and observe the terms of this Agreement and any other Financing Document to
which it is a party.

     8.02 No Conflict. There is no legal, contractual or other obligation
binding on such Party that is or will be contravened (or, in the case of a
contractual obligation, in respect of which a breach has occurred or will occur)
by reason of the execution and delivery of, or the performance or observance by
such Appointed Party of any of the terms or provisions of this Agreement and any
other Financing Document to which it is a party.

     8.03 Registrations, Declarations. No registrations, declarations or filings
with, or consents, licenses, approvals or authorizations of, any legislative
body, government department or government authority are necessary or required
under any applicable law for the due execution and delivery by such Appointed
Party, or for the performance by such Appointed Party, of this Agreement, or to
assure the validity, binding effect and enforceability hereof with respect to
such Appointed Party, other than such registrations, declarations, filings,
consents, licenses, approvals or authorizations that have been obtained as of
the date hereof.

     8.04 Due Execution. This Agreement and any other Financing Document to
which it is a party have been duly executed by such Appointed Party and
constitute the legal, valid and binding obligations of such Appointed Party
enforceable against it in accordance with their respective terms, subject in the
case of enforcement to any applicable bankruptcy, insolvency,


                                       57

moratorium or other similar laws affecting the enforcement of creditors' rights
in general and to equitable principles of general application.

                                   ARTICLE IX

                                  MISCELLANEOUS

     9.01 Accession Agreement.

     (a) On the Bonds Closing Date, if any, the Common Representative shall
become a party to this Agreement by entering into, in its capacity as Common
Representative, New Party Accession Agreement and thereupon the Common
Representative and the Peruvian Bondholders shall have all the rights and
obligations of, respectively, the Common Representative and the Peruvian
Bondholders under this Agreement.

     (b) A Replacement Lender or a Bridge Loan Provider, as the case may be, may
become a party to this Agreement by entering into a New Party Accession
Agreement and thereupon such Replacement Lender or Bridge Loan Provider, as the
case may be, shall have all the rights and obligations of a Senior Facility
Lender.

     9.02 Effectiveness. This Agreement shall come into full force upon its
execution and delivery by each of the Parties, provided that none of the
security interests granted by the Borrower hereunder shall become effective
until the Closing Date.

     9.03 Termination. This Agreement shall terminate upon termination of
Commitments and the earlier of (i) full payment of all Senior Loans Obligations
owed to the Senior Lenders and (ii) full payment of all Senior Facility Loans
Obligations owed to the Senior Facility Lenders and release, in accordance with
Section 7.03 of the Peruvian Bonds Indenture, of all security interests and
rights in the Collateral created in favor of the Senior Lenders. Notwithstanding
the termination of this Agreement as provided above in this Section, the
Borrower's obligations which are expressly provided in this Agreement to survive
shall survive. Upon satisfaction of each of the following conditions precedent,
this Agreement and the security interests and rights created by or pursuant to
this Agreement or any Financing Document in favor of the Senior Lenders and the
Appointed Parties shall terminate, and the Administrative Agent shall, at the
expense of the Borrower, execute and deliver a termination statement and such
instruments of satisfaction, discharge and release of security as may be
requested by the Borrower and shall pay, assign, transfer and deliver to or to
the order of the Borrower all moneys and investments in the Accounts and all
other trust funds and other property then held by it hereunder:

          (i) all Senior Loans Obligations and all sums payable hereunder and
     under any Financing Document to the Senior Facility Lenders and the
     Appointed Parties shall have been paid in full (and each Senior Facility
     Lender so certifies to the Trustee with respect to the Senior Loans
     Obligations owed to it); and

          (ii) the Borrower shall have delivered to the Administrative Agent a
     certificate stating that the conditions precedent to termination pursuant
     to this Section have been satisfied.


                                       58

     9.04 Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such party (any such communication that is
not in writing shall be confirmed in writing), provided that in the case of the
Trustee or the Offshore Collateral Agent or the Onshore Collateral Agent, no
notice, request, demand, consent, designation, direction, instruction,
certificate, report or other communication to be given hereunder shall be sent
by electronic mail and provided further that any notice, request, demand,
consent, designation, direction, instruction, certificate, report or other
communication sent to the Trustee or the Offshore Collateral Agent or the
Onshore Collateral Agent shall be deemed effective upon actual receipt thereof:

     If to the Borrower, at

          c/o Asiento Minero Cerro Verde
          Uchumayo (Arequipa/Peru), Casilla Postal #299
          Shipping:  Av. Alfonso Ugarte #304
          Cercado, Arequipa, Republic of Peru
          Attention: General Manager
          Telephone: (054) 283-363
          Facsimile: (054) 283-376
          with a copy to PDC, at

          Phelps Dodge Tower
          1 North Central Avenue
          Phoenix, Arizona  85004
          U.S.A.
          Attention: Treasurer
          Telephone: (602) 366-8100
          Facsimile: (602) 366-8150

     If to JBIC, at

          4 - 1, Ohtemachi 1 - Chome
          Chiyoda - Ku
          Tokyo 100 - 8144
          Japan
          Attention: Director, Division 3, Energy and Natural Resources Finance
          Department
          Telephone: +81-3-5218-3514
          Facsimile: +81-3-5218-3966


                                       59

     If to SMBC, at

          1-2, Yurakucho 1 - Chome,
          Chiyoda-ku,
          Tokyo,
          Japan 100-0006
          Attention: Corporate Banking, Division No. 3
          Telephone: +81-3-3240-8940
          Facsimile: +81-3-3240-2360

     If to BOT-M, at

          2-7-1, Marunouchi, Chiyoda-Ku
          Tokyo 100-8388
          Japan
          Attention: Structured Finance Division, Project Finance Group
          Telephone: +81-3-5200-6555
          Facsimile: +81-3-5200-6558

     If to KfW, at

          Department X1a1 - Export and Project Finance (Natural Resources)
          Palmengartenstrasse 5-9
          60325 Frankfurt am Main
          Germany
          Attention: Stephan Pueschel
          Telephone: +49-69-7431-4649
          Facsimile: +49-69-7431-2016

     If to any other Senior Facility Lender, to the Administrative Agent

          CALYON New York Branch
          1301 Avenue of the Americas
          New York, New York 10019
          Attention: Ted Vandermel
          Telephone:  (212) 261-7888
          Facsimile:  (212) 261-3421

     If   to the Common Representative, at the address specified in the New
          Party Accession Agreement entered into by the Common Representative
          pursuant to which the Common Representative agrees to become a Party
          to this Agreement

     If   to the Peruvian Bondholders, to the Common Representative at the
          address to be specified in the New Party Accession Agreement entered
          into on the Bond Issuance Date


                                       60

     If to the Trustee or the Offshore Collateral Agent, at

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013
          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

     If to the Onshore Collateral Agent, at

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480
          3rd Floor
          San Isidro, Lima, Peru
          Attention: Raul Denegri G.
          Telephone: (511) 215-0126
          Facsimile: (511) 221-5040

     If to the Administrative Agent, at

          CALYON New York Branch
          1301 Avenue of the Americas
          New York, New York 10019
          Attention: Ted Vandermel
          Telephone: (212) 261-3421
          Facsimile: (212) 261-3421

     9.05 Entire Agreement. This Agreement and the other Financing Documents
constitute the entire agreement and understanding, and supersede all prior
agreements and understandings (both written and oral), between the Parties, and
there are no warranties, representations or other agreements between the Parties
in connection with the subject matter hereof except as specifically set forth
herein and therein.

     9.06 Amendments and Waivers.

     (a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) the Borrower, (ii) with respect to any amendment, supplement or modification
that modifies any provision of this Agreement in a manner that adversely affects
any Appointed Party's rights or indemnities hereunder or enlarges its duties
hereunder, such Appointed Party and (iii) by the Requisite Lenders.

     (b) No waiver by any Party of any of its rights, powers and privileges
under this Agreement shall be effective other than pursuant to a written
instrument executed by the Party waiving such right, power or privilege, except
that a waiver of rights, powers and privileges by


                                       61

the Senior Lenders can be executed by the Administrative Agent acting in
accordance with Section 6.03.

     9.07 Benefits of Agreement. Nothing in this Agreement, express or implied,
shall give to any Person, other than the MSA Parties and their successors and
permitted assigns hereunder, any benefit or any legal or equitable right or
remedy under this Agreement.

     9.08 Successors and Assigns.

     (a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Appointed Parties and the Senior Lenders and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent (acting upon instructions from each Senior
Lender).

     (b) The Common Representative and any Replacement Lender shall become an
MSA Party as contemplated under Section 9.01.

     (c) The rights of a Peruvian Bondholder shall be transferred to a
transferee of Peruvian Bonds.

     (d) Upon prior written notice to the Borrower and the Administrative Agent,
each Senior Facility Lender may assign its rights hereunder to any other lender
to which such Senior Facility Lender makes a transfer of an Advance as permitted
under Section 12.13 of the Master Participation Agreement.

     9.09 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     9.10 Consent to Jurisdiction.

     (a) The Borrower hereby irrevocably consents and agrees, for the benefit of
each Party hereto, that any legal action, suit or proceeding against it with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Agreement may be brought in any Federal or State
court located in New York County in the City of New York and hereby irrevocably
accepts and submits to the non-exclusive jurisdiction of such court with respect
to any such action, suit or proceeding. The Borrower hereby waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions, suits or proceedings, brought in any such court and hereby
further waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum.

     (b) Under the MPA, the Borrower has irrevocably appointed CT Corporation,
with offices at the date of this Agreement at 1633 Broadway, New York, New York,
U.S.A., as its authorized agent on which any and all legal process may be served
in any such action, suit or proceeding brought in any Federal or State court
located in New York County in the City of New York. The Borrower agrees that
service of process in respect of it upon such agent, together with written
notice of such service given to it in the manner provided in Section 9.04
hereof, shall be


                                       62

deemed to be effective service of process upon it in any such action, suit or
proceeding. The Borrower agrees that the failure of such agent to give notice to
it of any such service shall not impair or affect the validity of such service
or any judgment rendered in any action, suit or proceeding based thereon. If for
any reason such agent shall cease to be available to act as such, the Borrower
agrees to designate a new agent in New York County in the City of New York, on
the terms and for the purposes of this Section 9.10. Nothing herein shall be
deemed to limit the ability of the Offshore Collateral Agent or Onshore
Collateral Agent to serve any such legal process in any other manner permitted
by applicable law or to obtain jurisdiction over the Borrower or bring actions,
suits or proceedings against them in such other jurisdictions, and in such
manner, as may be permitted by applicable law.

     9.11 No Trial by Jury. Each Party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

     9.12 Remedies.

     (a) Other than as stated expressly herein, no remedy herein conferred upon
the Offshore Collateral Agent and the Onshore Collateral Agent for the benefit
and on behalf of the Secured Parties is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in additional
to every other remedy given hereunder, under the other Financing Documents, or
now or hereafter existing at law or in equity or by statue or otherwise.

     (b) No failure on the part of any Senior Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power, or
privilege under this Agreement or any other Financing Document shall operate as
a waiver thereof nor shall any single or partial exercise of any right, power or
privilege under any such document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. No Senior Lender shall
be responsible for the failure of any other Senior Lender to perform its
obligations hereunder or under any Senior Loan Agreement.

     (c) In case any Senior Lender shall have proceeded to enforce any right,
remedy or power under this Agreement or any other Financing Document and the
proceeding for the enforcement thereof shall have been discontinued or abandoned
for any reason or shall have been determined adversely to such Senior Lender,
then and in every such case the Borrower and the Senior Lenders shall, subject
to any effect of or determination in such proceeding, severally and respectively
be restored to their former positions and rights hereunder and under such other
Financing Document.

     9.13 Currency Equivalents. Calculation of currency equivalents (for any
amount, its "Equivalent") on any day shall be based on the foreign exchange spot
mid-rates for such day reported in The Wall Street Journal, Eastern Edition, or,
if not so reported, on the mid-market foreign exchange spot closing rates for
such day reported in the Financial Times, or, if not so reported, on spot
foreign exchange mid-market rates for trading among banks in amounts of
U.S.$1,000,000 and more as quoted by or to the Trustee.


                                       63

     9.14 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

     9.15 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different Parties on separate counterparts,
each of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.

     9.16 No Partnership. Nothing contained in this Agreement and no action by
any of the Parties is intended to constitute or shall be deemed to constitute
among such Parties a partnership, association, joint venture or other entity.

                  [Remainder of page Intentionally Left Blank]


                                       64

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed.

                                            SOCIEDAD MINERA CERRO VERDE S.A.A.


                                            By: /s/ Cristian Moran
                                                --------------------------------
                                                Name: Cristian Moran
                                                Title: Attorney in Fact


                                            JAPAN BANK FOR INTERNATIONAL
                                            COOPERATION


                                            By: /s/ Akira Ogawa
                                                --------------------------------
                                                Name: Akira Ogawa
                                                Title: Director General --
                                                Energy and Natural Resources
                                                Finance Department


                                            SUMITOMO MITSUI BANKING CORPORATION


                                            By: /s/ Takashi Shimahara
                                                --------------------------------
                                                Name: Takashi Shimahara
                                                Title: Joint General Manager -
                                                Structured Finance Department


                                            THE BANK OF TOKYO-MITSUBISHI, LTD.


                                            By: /s/ Hiroaki Makino
                                                --------------------------------
                                                Name: Hiroaki Makino
                                                Title: Senior Manager -
                                                Structure Finance Division


                                            KfW


                                            By: /s/ Wolfgang Behler
                                                --------------------------------
                                                Name: Wolfgang Behler
                                                Title: First Vice President


                                       65

                                            By: /s/ Stephan Pueschel
                                                --------------------------------
                                                Name: Stephan Pueschel
                                                Title: Senior Project Manager


                                            CALYON NEW YORK BRANCH


                                            By: /s/ Georges Romano
                                                --------------------------------
                                                Name: Georges Romano
                                                Title: Managing Director


                                            By: /s/ Samuel Sherman
                                                --------------------------------
                                                Name: Samuel Sherman
                                                Title: Director


                                            THE ROYAL BANK OF SCOTLAND PLC


                                            By: /s/ Gregor Hamilton
                                                --------------------------------
                                                Name: Gregor Hamilton
                                                Title: Associate Director


                                            THE BANK OF NOVA SCOTIA


                                            By: /s/ Michael K. Eddy
                                                --------------------------------
                                                Name: Michael K. Eddy
                                                Title: Director-Mining


                                            By: /s/ Alexander Mihailovich
                                                --------------------------------
                                                Name: Alexander Mihailovich
                                                Title: Associate


                                            MIZUHO CORPORATE BANK, LTD.


                                            By: /s/ Masatoshi Abe
                                                --------------------------------
                                                Name: Masatoshi Abe
                                                Title: Senior Vice President


                                       66

                                            THE ADMINISTRATIVE AGENT


                                            CALYON NEW YORK BRANCH,
                                               as Administrative Agent


                                            By: /s/ Samuel Sherman
                                                --------------------------------
                                                Name: Samuel Sherman
                                                Title: Director


                                            By: /s/ Ted Vandermel
                                                --------------------------------
                                                Name: Ted Vandermel
                                                Title: Director


                                            THE TRUSTEE

                                            CITIBANK, N.A.,
                                            as Trustee and Offshore Collateral
                                            Agent


                                            By: /s/ Jenny Cheng
                                                --------------------------------
                                                Name: Jenny Cheng
                                                Title: Vice President


                                            CITIBANK DEL PERU S.A.,
                                            as Onshore Collateral Agent


                                            By: /s/ Jose Antonio Blanco
                                                --------------------------------
                                                Name: Jose Antonio Blanco
                                                Title: Vice Presidente


                                            By: /s/ Manuel Salazar Maurer
                                                --------------------------------
                                                Name: Manuel Salazar Maurer
                                                Title: Vice Presidente


                                       67

                                                                      SCHEDULE A

                           LIST OF MINING CONCESSIONS



                                 PUBLIC REGISTRATION
                                 -------------------                                    DATE
   CONCESSION          CODE        FICHA    PARTIDA    CURRENT APPROVAL RESOLUTION    APPROVAL
- ----------------   -----------    ------   --------    ---------------------------   ---------
                                                                      
CERROVERDE 1,2,3   01562191Z01    226173                    R.D. 126-91-EM-DGM       20-Dic-91
TAMBOQUEMADO1        010220193      8459                     R.J.1258-98-RPM         31-Mar-98
TIABAYA-04           050003494      6188                    R.J. 005805-95-RPM       21-Nov-95
TIABAYA-05           050003594      6187                 R.J. 01112-2001-INACC/J     28-Sep-01
TIABAYA-06           050003694      6186                 R.J. 01092-2001-INACC/J     28-Sep-01
TIABAYA-10           050004094      6183                 R.J. 02052-2002-INACC/J     07-Nov-02
TIABAYA-12           050004294      6232                 R.J. 02153-2002-INACC/J     12-Nov-02
TIABAYA-14           050004494      6178                 R.J. 02057-2002-INACC/J     07-Nov-02
TIABAYA-16           050004694      6175                 R.J. 01154-2001-INACC/J     28-Sep-01
TIABAYA-21           050005194      6213                     R.J. 7832-94-RPM        23-Nov-94
TIABAYA-22           050005294      6212                     R.J. 8241-94-RPM        30-Nov-94
TIABAYA-23           050005394      6211                     R.J. 8211-94-RPM        30-Nov-94
TIABAYA-24           050005494      6210                     R.J. 8006-94-RPM        29-Nov-94
TIABAYA-25           050010995      6223                    R.J. 003753-95-RPM       17-Jul-95
TIABAYA-26           050010495      6224                    R.J. 003904-95-RPM       18-Jul-95
TIABAYA-27           050011095      6225                     R.J. 4725-95-RPM        29-Sep-95
TIABAYA-28           050010595      6226                    R.J. 003902-95-RPM       18-Jul-95
TIABAYA-29           050011195      6227                    R.J. 003488-95-RPM       30-Jun-95
TIABAYA-30           050010795      6228                    R.J. 003903-95-RPM       18-Jul-95
TIABAYA-31           050010895      6229                    R.J. 003901-95-RPM       18-Jul-95
TIABAYA-32           050010695      6230                    R.J. 003752-95-RPM       17-Jul-95


                                                                      
TIABAYA-33           050011395      6254                    R.J. 003549-95-RPM       17-Jul-95
TIABAYA-34           050011795      6255                    R.J. 006028-95-RPM       30-Nov-95
TIABAYA-37           050015795      9144                 R.J. 01084-2001-INACC/J     26-Sep-01
TIABAYA-47           050014795      9153                 R.J. 01155-2001-INACC/J     28-Sep-01
TIABAYA-48           050018395      9155                 R.J. 01091-2001-INACC/J     28-Sep-01
TIABAYA-52           050009596      9173                     R.J. 0924-99-RPM        09-Abr-99
TIABAYA-53           050010196      9152                    R.J. 00315-98-RPM        30-Ene-98
TIABAYA-54           050010496      9151                    R.J. 06280-97-RPM        29-Ago-97
TIABAYA-67           050006599      9445                   R.J. 01374-2000-RPM       05-Abr-00
TIABAYA-87           050001901      9466                 R.J. 00837-2001-INACC/J     16-Ago-01
TIABAYA-90(1)        010101402             11047876       R.J.02178-2002-INACC/J     18-Nov-02
TIABAYA-91           050003103             11042328       R.J.02305-2003-INACC/J     27-Ago-03
TIABAYA-92           050003203             11042357       R.J.03092-2003-INACC/J     09-Oct-03
TIABAYA-93           050003303             11042372       R.J.02217-2003-INACC/J     25-Ago-03
TIABAYA-94(2)        050010903             11047875       R.J.04332-2003-INACC/J     10-Dic-03
TIABAYA-95           050008804             11047873       R.J.03046-2004-INACC/J     24-Ago-04



- ----------
(1)  To become a Mining Concession after registration to the Borrower.

(2)  To become a Mining Concession after registration to the Borrower.


                                        2



                               PUBLIC REGISTRATION
                               -------------------                                    DATE
   CONCESSION         CODE      FICHA     PARTIDA    CURRENT APPROVAL RESOLUTION    APPROVAL
- ----------------   ---------    -----   ----------   ---------------------------   ---------
                                                                    
TIABAYA-96(3)      050008904            IN PROCESS      R.J.00915-2005-INACC/J     02-Mar-05
CHRISTMAS(4)       050003403             11048907       R.J.01982-2003-INACC/J     25-Jul-03
CHRISTMAS 1        050016403             11047872       R.J.02750-2004-INACC/J     04-Ago-04
TIABAYA-97         050015404             11059079      R.J. 01133-2005-INACC/J     10-Mar-05
CHRISTMAS 2        050004005             11059078      R.J. 02072-2005-INACC/J     13-May-05


                            BENEFICIATION CONCESSION



                              PUBLIC REGISTRATION
                              -------------------                                    DATE
   CONCESSION        CODE       FICHA    PARTIDA    CURRENT APPROVAL RESOLUTION    APPROVAL
- ----------------   --------     ------   -------    ---------------------------   ---------
                                                                   
PLANTA BENEFICIO   PO302563     229023                 R.D. 135-2003-EM/DGM       12-Jun-03
                                                       R.D. 151-2002-EM/DGM       21-May-02
                                                        R.D.308-96-EM-DGM         05-Sep-96
                                                        R.D. 339-96-EM/DGM        12-Ago-96


- ----------
(3)  To become a Mining Concession after registration to the Borrower.

(4)  To become a Mining Concession after registration to the Borrower.


                                        3

                                                                  EXECUTION COPY

                                   SCHEDULE Z

     In this Schedule Z, in the Master Security Agreement and the Appendices and
Exhibits thereto, and in any other document that references this Schedule Z, the
following terms shall have the meanings assigned below (the singular includes
the plural and vice versa):

     "Abandonment": the meaning given in Section 9.04 of the MPA.

     "Accelerated Parent Company": a Parent Company with respect to which a
Completion Guarantee Acceleration Event has occurred.

     "Acceptable Credit Support Instruments": an Acceptable Guarantee or an
Acceptable Letter of Credit.

     "Acceptable Guarantee": an unconditional and irrevocable Dollar-denominated
guarantee substantially in the form of Exhibit O-1 or Exhibit O-2 to the Master
Security Agreement or in such other form and substance reasonable satisfactory
to the Supermajority Facility Lenders issued by a Person that, at the time of
issuance, is an Acceptable Guarantor, which is non-recourse to the Borrower and
drawable upon demand by the Trustee; provided that no such guarantee shall be
deemed an "Acceptable Guarantee" if the Borrower is liable, directly or
indirectly, for any reimbursement obligations to the guarantor or any other
Person (other than if such reimbursement obligation is a Subordinated Loan) as a
result of a drawing under such guarantee.

     "Acceptable Guarantor": a Person whose long term senior unsecured debt
obligations are rated at least BBB- by Standard & Poor's or Baa3 by Moody's and
whose Net Worth is at least equal to U.S.$1 billion (or the Equivalent) or,
alternatively, any other Person so long as the Borrower gives written notice to
the Administrative Agent that it has selected such Person as an Acceptable
Guarantor, and the Administrative Agent, acting pursuant to written instructions
from the Supermajority Lenders, consents to such selection.

     "Acceptable Issuer": any bank having capital funds and reserves of not less
than U.S.$1,000,000,000 (or the Equivalent) and whose long term senior unsecured
debt obligations are rated at least A- by Standard & Poor's or A3 by Moody's or,
alternatively, any other Person so long as the Borrower gives written notice to
the Administrative Agent that it has selected such Person as an Acceptable
Issuer, and the Administrative Agent, acting pursuant to written instructions
from the Supermajority Lenders, consents to such selection.

     "Acceptable Letter of Credit": an irrevocable Dollar-denominated standby
letter of credit substantially in the form of Exhibit K to the Master Security
Agreement or in such other form and substance reasonably satisfactory to the
Supermajority Lenders, in favor of the Trustee for the benefit of the Senior
Lenders, issued by an Acceptable Issuer, which (i) has an expiration date not
prior to the date one year after the issuance thereof, (ii) is non-recourse to
the Borrower and (iii) is drawable upon demand by the Trustee; provided that no
such letter of credit shall be deemed an "Acceptable Letter of Credit" if the
Borrower is liable, directly or indirectly, for any reimbursement obligations to
the issuer of such letter of credit or any other Person (other than if

such reimbursement obligation is a Subordinated Loan) as a result of a drawing
under such letter of credit.

     "Acceptable PD Replacement": the meaning given in Section 5.01(q)(i) of the
MPA.

     "Accounts": the Proceeds Account, the Onshore Dollars Account, the Onshore
Nuevos Soles Account, the Operating Onshore Dollars Account and the Operating
Onshore Nuevos Soles Account.

     "ACMC": the meaning given in Recital C of the MPA.

     "Additional Tax Amount": the meaning given in Section 3.09(b) of the MPA.

     "Adequate Power Supply Commitments": an unconditional agreement to supply
power to the Borrower from a reliable power supplier (which will include EGASA).

     "Administrative Agent": the meaning given in the preamble of the MPA.

     "Advance": the meaning given in Section 2.01(a) of the MPA.

     "Affiliate": with respect to any Person (the "First Person"), any other
Person (the "Second Person") which directly or indirectly Controls, or is under
common Control with, or is Controlled by, such First Person.

     "Affiliate Transferee": the meaning given in Section 2.02(a) of the TRA.

     "Aggregate Base Advance Amount": with respect to any of the Senior Facility
Lenders, the aggregate amount of Base Advances made by such Senior Facility
Lender under its Senior Facility Loan Agreement prior to repayment of any such
Base Advances.

     "Aggregate Committed Amount": with respect to each Senior Facility Lender,
the sum of its Base Committed Amount and Stand-By Committed Amount, if any.

     "Aggregate Issued Bond Amount": with respect of the Peruvian Bonds the
aggregate principal amount of Peruvian Bonds issued by Borrower.

     "Aggregate Stand-By Advance Amount": with respect to any of the Commercial
Banks, the aggregate amount of Stand-By Advances made by such Commercial Bank
under the Commercial Bank Loan Agreement prior to repayment of any such Stand-By
Advances.

     "Ancillary Capital Expenditures": capital expenditures that are neither
Incremental Capital Expenditures nor Sustaining Capital Costs.

     "Annual Budget": the meaning given in Section 7.05(b) of the MPA.

     "Annual DSCR": with respect to any calendar year, the DSCR appearing on
line 80 of the Executive Summary sheet of the Financial Model.


                                       2

     "Applicable Environmental Laws": any statute, law, ordinance, code, rule,
regulation, order, decree or other requirement of any Peruvian Governmental
Authority regulating the protection of human health (as it relates to releases
of, or exposure to, hazardous substances) or the environment, applicable to the
Sulfide Project and the Borrower.

     "Appointed Parties": collectively, the Trustee, the Onshore Collateral
Agent, the Offshore Collateral Agent and the Administrative Agent.

     "Appointing Parties": (i) with respect to the Trustee - the Borrower and
the Senior Lenders, and (ii) with respect to the Offshore Collateral Agent, the
Onshore Collateral Agent and the Administrative Agent - the Senior Lenders.

     "Assigned Agreements": the meaning given in Section 3.03 of the MSA.

     "Authorized Officers": with respect to any Person, any duly authorized
officer of such Person.

     "Availability Period End Date": the earliest of (i) the Completion Release
Date, (ii) the date of full utilization of the Senior Facility Loans and (iii)
the date that is 30 months after the date of the initial disbursement of the
first Base Advance, but in any event no later than one month prior to the first
Payment Date.

     "Base Advance": the meaning given in Section 2.04(a) of the MPA.

     "Base Case Assumptions": the Base Case Assumptions Scenario as per the
Sensitivities Tab of the Financial Model.

     "Base Committed Amount": with respect to each Senior Facility Lender, the
amount set forth opposite its name on Schedule A to the Master Participation
Agreement, in the column titled "Base Committed Amounts," as such amount may be
adjusted from time to time in accordance with the MPA.

     "Beneficiation Concession": the beneficiation concession identified in
Schedule A to the MSA.

     "Bonds Closing Date": the meaning given in Section 2.02(b) of the MPA.

     "Bond Issuance Notice": the meaning given in Section 2.02(a) of the MPA.

     "Borrower": the meaning given in the preamble of the MPA.

     "Borrower Abandonment Event of Default": an MPA Event of Default described
in Section 9.01(l) of the MPA and an Indenture Event of Default described in
Section 8.01(k) of the Peruvian Bonds Indenture, which has been declared in
accordance with the MPA or the Peruvian Bonds Indenture, as the case may be.


                                       3

     "Borrower Bankruptcy Event of Default": an MPA Event of Default described
in Section 9.01(d) of the MPA and an Indenture Event of Default described in
Section 8.01(c) of the Peruvian Bonds Indenture.

     "Borrower Cessation Notice": an MPA Cessation Notice and a cessation notice
delivered pursuant to Section 9.03(n) of the Peruvian Bonds Indenture.

     "Borrower Completion Event of Default": an MPA Event of Default described
in Section 9.01(m) of the MPA.

     "Borrower Enforcement Action": means (i) applying funds in the Accounts as
contemplated in Section 4.17 of the MSA; (ii) taking any enforcement action with
respect to any security interests in the Collateral; and/or (iii) taking any
other legal, equitable or other remedial action against the Borrower provided
under any Financing Documents or any other action available under applicable
law, provided that actions taken by Senior Lenders pursuant to Section 5.01 of
the MSA shall not constitute "Borrower Enforcement Action".

     "Borrower Enforcement Direction": the meaning given in Section 5.02(a) of
the MSA.

     "Borrower Enforcing Lenders": the meaning given in Section 5.05(a) of the
MSA.

     "Borrower Event of Default": an MPA Event of Default or an Indenture Event
of Default, which has been declared in accordance with the MPA or the Peruvian
Bonds Indenture, as the case may be.

     "Borrower Expropriation Event of Default": an MPA Event of Default
described in Section 9.01(j) of the MPA arising as a result of the occurrence of
an Expropriatory Action.

     "Borrower Financial Completion Certificate": the certificate referred to in
Section 2.01(g) of the Completion Guarantee.

     "Borrower Payment Event of Default": an MPA Event of Default described in
Section 9.01(a) of the MPA and an Indenture Event of Default described in
Section 8.03(b) of the Peruvian Bonds Indenture, which has been declared in
accordance with the MPA or the Peruvian Bonds Indenture, as the case may be.

     "BOT-M": the meaning given in the preamble of the MPA.

     "Bridge Loan Agreement": a loan agreement which as of the date it is
entered into (x) is entered into on terms and conditions no less favorable to
the Borrower than the terms and conditions of the Senior Facility Loan Agreement
for the applicable Suspending Lender, (y) provides for payment of principal and
interest on the same dates and in the same percentages as principal and interest
are payable under the Senior Facility Loan Agreement for the applicable
Suspending Lender (including the amortization schedule thereto) and (z) shall be
secured on a pari passu basis with the other Senior Facility Loan Agreements but
which shall not entitle the lender thereunder (or holder of loans thereunder) to
any voting rights so long as such lender or holder is a Parent Company or an
Affiliate thereof.


                                       4

     "Bridge Loan Provider": the meaning given in Section 3.10(b) of the MPA.

     "Business": the Sulfide Project and the Current Operations.

     "Business Day": a day on which banks are generally open for business in
London, England, New York, New York, United States, Tokyo, Japan, Frankfurt am
Main, Germany and Lima, Peru.

     "Buy-Down Notice Date": the meaning given in Schedule A to the Completion
Guarantee.

     "Buyer": any purchaser of Concentrates, Cathodes or other products under a
Sales Agreement.

     "BVN": the meaning given in Recital C of the MPA.

     "BVN Affiliate Transferee": an Affiliate Transferee to whom BVN or a
previous BVN Affiliate Transferee has transferred Restricted Common Stock or
Subordinated Loans in accordance with Section 2.02(a) and Section 2.02(b) of the
TRA.

     "Calculation Date": the meaning given in Schedule A to the Completion
Guarantee.

     "Calculation Date Excess Amount": the meaning given in Schedule A to the
Completion Guarantee.

     "Calculation Date Outstanding Amount": the meaning given in Schedule A to
the Completion Guarantee.

     "Calculation Period": each period commencing on a Payment Date and ending
on the next succeeding Payment Date (including the first Payment Date and
excluding the second Payment Date of each such period).

     "Calyon": the meaning given in the preamble of the MPA.

     "Calyon Lender": Calyon or any assignee of Calyon that (i) has purchased
Senior Facility Loans in excess of U.S.$10 million and (ii) has been designated
by Calyon, or by the immediate predecessor Calyon Lender, by written notice to
the Administrative Agent and the Borrower as the Calyon Lender.

     "Capital Increase": the issuance by the Borrower, on June 1, 2005, in
accordance with the terms of the Participation Agreement, of 122,746,913 new
Common Stock.

     "Capital Lease Obligations": for any Person, the obligations of such Person
to pay rent or other amounts under a lease of (or other agreement conveying the
right to use) any Property which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person under United
States GAAP and, for the purposes hereof the amount of such obligations shall be
the capitalized amount thereof, determined in accordance with United States
GAAP.


                                       5

     "Cathodes": the copper cathodes produced by the Borrower.

     "CCMC": the meaning given in Recital C of the MPA.

     "CG Party" or "CG Parties": the Parent Companies, each of the Lead JBIC
Arrangers, each of the Senior Facility Lenders and the Administrative Agent.

     "Closing Date": the date of disbursement of the initial Base Advance by the
Senior Facility Lenders.

     "Closing Documents": collectively, each Financing Document and Closing
Project Document.

     "Closing Insurance Document": such insurance documentation required to be
delivered in order to satisfy the requirements of Appendix II to the MPA.

     "Closing Project Documents": collectively, the Offtake Agreements, the
Power Supply Agreements, the Construction Agreements, the Operator's Agreement,
the Transportation Agreements and the Port Services Agreement.

     "Closure Law": means the Mine Closure Plan Law (Ley que regula el cierre de
Minas) number 28090 published October 14, 2003 and the Closure Regulations
(Reglamento para el cierre de Minas), D.S. 033-20005-EM, published August 15,
2005.

     "Closure Plan": The Borrower's Mine Closure Plan regulated by the Closure
Law.

     "CMC": the meaning given in Recital C of the MPA.

     "Collateral": the collateral to be secured from time to time pursuant to
the MSA or any other Security Document.

     "Collateral Agents": the Offshore Collateral Agent and the Onshore
Collateral Agent.

     "Commercial Bank": any of Calyon, RBS, Scotia Capital or Mizuho.

     "Commercial Banks Loan Agreement": the meaning given in Section 2.01(a) of
the MPA.

     "Commercial Production Start-up Date": the date as of which the Borrower,
in its judgment, has achieved start of commercial production as notified by the
Borrower to the Administrative Agent.

     "Commitment": the commitment of each Senior Facility Lender to make
Advances pursuant to the Senior Facility Loan Agreement to which it is a party.

     "Commitment Percentage": with respect to each Senior Facility Lender, the
percentage that the Aggregate Committed Amount of such Senior Facility Lender
bears to the cumulative Aggregate Committed Amounts of all Senior Facility
Lenders.


                                       6

     "Committed Amount": with respect to each Senior Facility Lender, its Base
Committed Amount and, with respect to each Commercial Bank, its Stand-By
Committed Amount.

     "Common Representative": the entity appointed as the Common Representative
of the Peruvian Bondholders under the Peruvian Bonds Indenture.

     "Common Stock": the shares of common voting stock of the Borrower, with a
par value of approximately U.S.$0.5409 per share.

     "Completion Arbitration": the meaning given to such term in Section 2.03(b)
of the Completion Guarantee.

     "Completion Certificates": collectively, the Full Completion Variable
Certificates, the Partial Completion Variable Certificates and the Non-Variable
Certificates.

     "Completion Guarantee": the Completion Guarantee, dated as of the date
hereof, among the Parent Companies, the Borrower, the Senior Facility Lenders
and the Administrative Agent.

     "Completion Guarantee Acceleration Event": with respect to any Parent
Company, either (i) such Parent Company commences a proceeding under any
applicable bankruptcy, reorganization, arrangement, readjustment of debt, relief
of debtors, dissolution, insolvency, liquidation or similar law (whether now or
hereafter in effect) relating to itself, or is declared bankrupt, is dissolved
by reason of insolvency or makes a general assignment for the benefit of
creditors, or any action is taken by it for the purpose of effecting any of the
foregoing or by a receiver, custodian or trustee or other officer or
representative of a court or of creditors; or there is commenced against it any
such proceeding which remains undismissed for 60 days or (ii) such Parent
Company fails to maintain a Net Worth at least equal to U.S.$1,500,000,000, in
the case of PDC, Y 90,000,000,000 in the case of SMM or SC and U.S.$300,000,000
in the case of BVN.

     "Completion Guarantee Obligations": the obligations of the Parent Companies
under the Completion Guarantee.

     "Completion Loans": the meaning given in 3.02(c) of the Completion
Guarantee.

     "Completion Release Date": the date of achievement of either (i) Full
Completion or (ii) Partial Completion.

     "Completion Test Period": the meaning given to such term in the Full
Completion Production Certificate or the Partial Completion Production
Certificate, as the case may be.

     "CONASEV": the Peruvian National Supervisory Commission for Companies and
Securities.

     "Concentrate": the copper concentrate to be produced by Borrower pursuant
to the Sulfide Project.

     "Concentrate Sale Agreements": the meaning given in Recital F of the MPA.


                                       7

     "Concessions": collectively, the Beneficiation Concession and the Mining
Concessions.

     "Confirmed Cash Shortfall": the meaning given in Section 3.02(b) of the
Completion Guarantee.

     "Construction Agreement": the Construction Agreement No. CV 12915, dated as
of December 14, 2004, between the Borrower and Fluor Daniel Sucursal Del Peru.

     "Construction Agreements": the Construction Agreement and the Engineering
Agreement.

     "Construction Budget": the program of work and expenditure required for
construction of the Sulfide Project.

     "Continuing" or "Continuance": (i) with respect to an MPA Event of Default,
that such MPA Event of Default has been declared as provided in Section 9.02 of
the MPA and that the Administrative Agent has not received an effective Borrower
Cessation Notice with respect thereto pursuant to Section 9.03 of the MPA, (ii)
with respect to a MPA Default, that the event or condition that constitutes the
MPA Default has occurred and is continuing and that the MPA Event of Default
that has, or would, with the giving of notice or passage of time, or both,
occur, has not been waived, (iii) with respect to an Indenture Event of Default,
that such Indenture Event of Default has been declared by a Notice of Payment
Event of Default, Notice of Bankruptcy Event of Default or a Notice of Ordinary
Event of Default, as the case may be, (as such terms are defined in the Peruvian
Bonds Indenture) and that the Borrower has not received a notice that such
Indenture Event of Default has ceased to exist in accordance with Section
9.03(n) of the Peruvian Bonds Indenture, (iv) with respect to a PC Event of
Default, that such PC Event of Default has been declared as provided in Section
8.03 of the Completion Guarantee and that the Administrative Agent has not
received an effective PC Cessation Notice with respect thereto pursuant to
Section 8.04 of the Completion Guarantee, and (v) with respect to an Event of
Political Force Majeure, that an Event of Political Force Majeure has occurred
and is continuing.

     "Control" (including, with its correlative meanings "Controlled by" and
"under common Control with"): possession, directly or indirectly, of power
(whether or not exercised) to direct or cause the direction of or exercise a
controlling influence on management or policies (whether through legal or
beneficial ownership of securities or partnership or other ownership interests,
by contract, representation on the board of directors or similar governing body
or otherwise).

     "Core Mining Concessions": collectively, Cerro Verde Mining Concession 1,
2, 3, and the Beneficiation Concession.

     "Core Peruvian Governmental Approval": the meaning given in Section 6.03(d)
of the MPA.

     "Current Operations": the meaning given in Recital A of the MPA.

     "Debt Buy-Down Closing Date": the meaning given in Section 3.03(c) of the
Completion Guarantee.


                                       8

     "Debt Buy-Down Notice": the meaning given in Section 3.03(a) of the
Completion Guarantee.

     "Debt Buy-Down Option": the meaning given in Section 3.03 of the Completion
Guarantee.

     "Debt Buy-Down Release Date": the date upon which any of the circumstances
described in Section 3.03(d) of the Completion Guarantee shall occur.

     "Debt Service Coverage Ratio" or "DSCR": with respect to any Calculation
Period, the ratio of Operating Cash to Senior Debt Service (in each case taking
into account incoming payments and expenses resulting from Permitted Hedges)
with respect to such Calculation Period.

     "Defaulting Parent Company": a Parent Company with respect to which a PC
Event of Default has occurred.

     "Depository Bank": the meaning given in Section 4.01(a)(ii) of the MSA.

     "Disbursement Date": the date requested for the disbursement of a Base
Advance or a Stand-By Advance, as the case may be, in the relevant Notice of
Borrowing.

     "Dollars" and "U.S.$": the lawful currency of the United States.

     "Domestic Buyer's Consent": the meaning given in Section 3.02(b)(ii) of the
MSA.

     "Domestic Sales": a sale to a Buyer located in Peru.

     "Domestic Sales Agreement": any Sales Agreement with a Buyer located in
Peru.

     "Dry Metric Tonne": 1,000 kilograms or 2.204.62 pounds avoirdupois without
any moisture (H2O) content.

     "Efficiency Full Completion Certificate": the certificate referred to in
Section 2.01(b) of the Completion Guarantee.

     "Efficiency Partial Completion Certificate": the certificate referred to in
Section 2.02(b) of the Completion Guarantee.

     "EGASA": Empresa de Generacion Electrica de Arequipa S.A.

     "El Peruano": the Peruvian official gazette published daily by Empresa
Peruana de Servicios Editoriales S.A., a private company fully owned and
Controlled by the Peruvian government.

     "Engineering Agreement": the Engineering Agreement No. CV 12913, dated as
of December 14, 2004, between the Borrower and Fluor Canada Ltd.


                                       9

     "Environmental Certificate": the certificate referred to in Section 2.01(h)
of the Completion Guarantee.

     "Environmental Laws": any statute, law, ordinance, code, rule, regulation,
order, decree or other requirement of any Governmental Authority regulating the
protection of human health (as it relates to releases of, or exposure to,
hazardous substances) or the environment, applicable to the Sulfide Project and
the Borrower.

     "Environmental and Social Management Plan" or "ESMP": the plan that
describes the measures to be taken (and the actions needed to implement such
measures) during the implementation and operation of the Sulfide Project to
eliminate, offset or reduce the adverse environmental and social impacts
identified in the environmental impact assessment documents and approval process
of the Sulfide Project.

     "Equator Principles": those principles so entitled and described therein as
"An industry approach for financial institutions in determining, accessing and
managing environmental and social risk in project financing", dated 4th June,
2003 and developed and adapted by the International Finance Corporation and
various other banks and financial institutions.

     "Equivalent": the meaning given in Section 12.06 of the MPA.

     "Eurodollar Business Day": any day on which banks are generally open for
business in London, England.

     "Event of Political Force Majeure": the occurrence of an Expropriatory
Action, War or a material breach or effective unilateral amendment or
cancellation by the Republic of Peru of the Stability Agreement (it being
understood that an assertion or determination that certain benefits of the
Stability Agreement do not apply to part of the operations of the Borrower will
not be treated as an Event of Political Force Majeure).

     "Excepted Property": (i) any contract relating to the construction or
operation of the Sulfide Project and the Current Operations which has a term of
less than one year and is in an amount that does not exceed the Agreed
Threshold, (ii) Mining Assets with an individual book value below the Agreed
Threshold, (iii) real property owned by the Borrower which is not a Mining Asset
and which has an individual book value below U.S.$1 million, (iv) equipment,
machinery and movable assets which are not Mining Assets and which have an
individual book value below U.S.$1 million, (v) the Stability Agreement, and
(vi) all permits, licenses, franchises and rights which pursuant to their terms
or under applicable law cannot be pledged or would become void or voidable if
pledged. For the purpose of this definition, (A) Mining Assets shall mean all
buildings and facilities used in connection with the mining activities supported
by the concessions subject to the mining mortgage described in Section 3.01(i)
of the MSA and all equipment, machinery and movable assets owned by the Borrower
and used in connection with the mining activities of the Borrower, and (B) the
Agreed Threshold shall equal U.S.$300,000, provided that (x) if the aggregate
book value of all unpledged Mining Assets as of the Closing Date exceeds U.S.$50
million, the Agreed Threshold shall be reduced as necessary so that the
aggregate book value of all unpledged Mining Assets does not exceed U.S.$50
million and (ii) if the aggregate book value of all unpledged Mining Assets as
of any date on which the security


                                       10

interest are to be updated subsequent to the Closing Date exceeds U.S.$180
million (or following the occurrence of a Borrower Event of Default 15% of the
aggregate book value of all Mining Assets, if lower than U.S.$180 million), the
Agreed Threshold shall be reduced so that the aggregate book value of all
unpledged Mining Assets does not exceed U.S.$180 million (or following the
occurrence of a Borrower Event of Default 15% of the aggregate book value of all
Mining Assets, if lower than U.S.$180 million).

     "Excluded Taxes": the meaning given in Section 3.09(a) of the MPA.

     "Expropriation Compensation": (i) all value (whether in the form of money,
securities, property or otherwise) paid or payable by Peru or its agencies or
instrumentalities, in whole or partial settlement of claims, whether or not
resulting from judicial proceedings and whether paid or payable within or
without Peru, as compensation for or in respect of Expropriatory Action (without
regard to the threshold set forth therein), and (ii) all rights to institute
proceedings (whether before a court or judge or by way of arbitration or
otherwise) to enforce any claims, execute judgments or awards and collect and
receive payments pursuant to clause (i) above.

     "Expropriatory Action": any action or series of actions (individually or in
the aggregate together with similar prior actions or series of actions) that is
taken, authorized or ratified by Peru or any agency, instrumentality or
political subdivision thereof, for the appropriation, requisition, confiscation,
expropriation or nationalization (by intervention, condemnation or other form of
taking), whether with or without compensation, of (i) equity interests
constituting more than 20% of aggregate common equity interests in the Borrower,
(ii) equity interests in the Borrower held by the Parent Companies or the
Shareholders constituting more than 20% of the aggregate equity interests held
by all Parent Companies and Shareholders collectively] or (iii) ownership or
control of the Project Property or any substantial part thereof the loss of
which would have a Material Adverse Effect.

     "Extraordinary Major Maintenance Expenditures": capital expenditures other
than resulting from works that must be performed periodically for the
maintenance of the assets of the Borrower.

     "Extraordinary Major Maintenance Reserve Amount": the amount determined by
the board of directors of the Borrower in accordance with Section 7.26 of the
MPA; provided that until such a determination is made for the first time, the
Extraordinary Major Maintenance Reserve Amount shall be equal to zero.

     "Extraordinary Major Maintenance Reserve Deficiency": as of any date, the
difference, if positive, between the Extraordinary Major Maintenance Reserve
Amount and the funds credited to the Extraordinary Major Maintenance Reserve
Sub-Account.

     "Extraordinary Major Maintenance Reserve Excess": as of any date, the
difference, if positive, between the funds credited to the Extraordinary Major
Maintenance Reserve Sub-Account and the Extraordinary Major Maintenance Reserve
Amount.

     "Extraordinary Major Maintenance Reserve Sub-Account": the meaning given in
Section 4.01(b)(iii) of the MSA.


                                       11

     "Feasibility Study": Cerro Verde Primary Sulfide Feasibility Study, dated
May 2004, prepared by Fluor Canada Ltd., as modified by the Project Update,
dated September 2004.

     "Federal Funds Effective Rate": for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by Administrative Agent from three Federal funds brokers of recognized
standing selected by Administrative Agent.

     "Final Maturity Date": the date that is 90 months after the first Payment
Date, provided that if such date shall fall on a day that is not a Business Day,
the Final Maturity Date shall be the immediately succeeding Business Day.

     "Financial Model": the financial model labeled FS108HPGR_v23LP SEP05
MinProd-D and delivered on the date of execution of the MPA.

     "Financial Statements": the meaning given in Section 6.09 of the MPA.

     "Financing Documents": the Senior Lenders Financing Documents and the
Senior Facility Lenders Financing Documents.

     "Force Majeure": with respect to each given Project Document, the meaning
given to such term in such Project Document.

     "Full Completion": the meaning given in Section 2.01 of the Completion
Guarantee.

     "Full Completion Variable Certificate": the certificate referred to in
Section 2.01 of the Completion Guarantee.

     "Funding Losses": the meaning given in Section 3.11 of the MPA.

     "General Corporate Law": Ley General de Sociedades enacted by Peruvian Law
No. 26887, as may be amended from time to time.

     "Global Coordinator": the meaning given in the Preamble to the MPA.

     "Government Rule": any statute, law, regulation, ordinance, rule, judgment,
decree, injunction, order, writ, decision, directive, environmental guideline,
policy, restriction or rule of common law, requirement of, or other mandatory
governmental restriction or any similar form of decision of or determination by,
any Governmental Authority, and authoritative interpretations thereof, whether
now or hereafter in effect, applicable from time to time to the relevant Person,
property or transaction.

     "Governmental Approval": any authorization, consent, approval, license,
ruling, permit, concession, certification, exemption, filing (other than with
respect to the perfection of any


                                       12

security interest), variance, order, judgment, decree, publication, notice to,
declaration of or with or registration by or with any Governmental Authority.

     "Governmental Authority": any national, state, county, city, town, village,
municipal or other local governmental department, commission, board, bureau,
agency, authority or instrumentality of any nation that affects or may affect
the transactions contemplated hereby or any political subdivision thereof, and
any Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other Person Controlled by any of the
foregoing.

     "Guarantee": a guarantee, an endorsement, a contingent agreement to
purchase or to furnish funds for the payment or maintenance of, or otherwise to
be or to become contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any Person, or
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) Property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss, and including,
without limitation, assuming liability (contingent or otherwise) for
reimbursement of any drawings upon any bank or other financial institution which
may issue one or more letters of credit or other similar instrument for the
benefit of another Person, but excluding endorsements for collection or deposit
in the ordinary course of business. The terms "Guarantee" and "Guaranteed" used
as a verb shall have a correlative meaning.

     "Guarantee Release Date": either (i) the date of achievement of Full
Completion, with respect to all Parent Companies, or (ii) the date of occurrence
of the Debt Buy-Down Release Date as contemplated under Section 3.03(d) of the
Completion Guarantee.

     "Guaranteed Obligations": the meaning given in Section 4.01(a) of the
Completion Guarantee.

     "Hazardous Material": means any pollutant, contaminant, chemical or toxic
or hazardous material, substance or waste or any other material or substance, to
the extent exposure to such material or substance is now or hereafter
prohibited, limited or regulated under any Environmental Law.

     "Hedge Agreements": (a) currency swap agreements, option contracts, futures
contracts, option on future contracts, spot or forward contracts or other
agreements to purchase or sell currency or any other hedging arrangement entered
into by the Borrower to hedge the Borrower's exposure to movements in the rates
of exchange of non-Dollar currencies, (b) interest rate swaps, option contracts,
futures contracts, options on futures contracts, cap, floors, collars or any
other similar hedging arrangements entered into by the Borrower to hedge the
Borrower's exposure to movements in interest rates, (c) forward purchases and
sales, put options, synthetic put options, call options, collars or any other
arrangement entered into by the Borrower to hedge the Borrower's exposure to
movements in prices of final products produced or inputs consumed in the
production process and (d) any other derivative transaction or hedging
arrangements into which the Borrower may enter.


                                       13

     "Hermes": Euler Hermes Kreditversicherungs-AG acting on behalf of the
government of the Federal Republic of Germany.

     "Hermes Guarantee": the insurance coverage to be provided by Hermes in
favor of KfW in respect of the Borrower's obligations under the KfW Loan
Agreement.

     "I.A. Financial Completion Certificate": the certificate referred to in
Section 2.01(f) of the Completion Guarantee.

     "Identified Material Project Documents": the Offtake Agreements, the
Operator's Agreement, the Power Supply Agreements, evidence of the Borrower's
water rights for the Sulfide Project and the Core Mining Concessions, and, in
each case, any substitute agreement thereto entered into after the date hereof
in accordance with the terms of the MPA.

     "Incremental Capital Expenditure": capital expenditures made to implement
productivity improvements.

     "Incumbency Certificate": an incumbency certificate substantially in the
form attached as Exhibit M to the MSA.

     "Indebtedness": for any Person, without duplication, (i) all indebtedness
created, issued or incurred by such Person for borrowed money (whether by loan
or the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (ii) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days after the date the respective goods are delivered or the
respective services are rendered; (iii) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for account of such Person; (iv) all Indebtedness of
others secured by (or for which the holder of any such obligation has an
existing right, contingent or otherwise, to be secured by) a Lien on any
Property of such Person, whether or not such Indebtedness so secured thereby has
been assumed by such Person; (v) Capital Lease Obligations of such Person; and
(vi) Indebtedness of others guaranteed by such Person.

     "Indemnified Taxes": the meaning given in Section 3.09(a) of the MPA.

     "Indenture Event of Default": any of the events listed in Section 8.01 of
the Peruvian Bonds Indenture.

     "Independent Engineer": Chlumsky, Armburst & Meyer, L.L.C., or such other
consultant appointed in accordance with Section 12.01(b) of the MPA.

     "Independent Public Accountants": PricewaterhouseCoopers or, for any given
year, the independent public accountants who certified the annual audited
financial statements of PDC for such year or any other independent public
accountant appointed in accordance with Section 12.01(a) of the MPA.


                                       14

     "Insurance Completion Certificate": the certificate referred to in Section
2.01(d) of the Completion Guarantee.

     "Insurance Consultant": Aon Risk Services, Inc. of Northern California
Insurance Services, or any such other insurance consultant appointed in
accordance with Section 12.01(b) of the MPA.

     "Interest Payment Date": prior to the first Payment Date, each September 20
and March 20 and, starting on the first Payment Date, each Payment Date,
provided that if any such date shall fall on a day that is not a Business Day,
the relevant Interest Payment Date shall be the immediately succeeding Business
Day.

     "Interest Period": any of the following periods:

          (i) on or prior to the first Payment Date, each period commencing on
     an Interest Payment Date (or with respect to the first Interest Period
     corresponding to the disbursement of any Advance on the date of
     disbursement of such Advance) and ending on the day immediately preceding
     the next succeeding Interest Payment Date (including the first day and the
     last day of such period); and

          (ii) thereafter, each period commencing on a Payment Date and ending
     on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

     "Investment Grade Entity": a Person whose long term senior unsecured debt
obligations are rated at least investment grade by Standard & Poor's or Moody's.

     "JBIC": the meaning given in the preamble of the MPA.

     "JBIC Environmental and Social Guidelines": the Japan Bank for
International Cooperation Guidelines for Confirmation of Environmental and
Social Considerations in the form attached to the JBIC Loan Agreement.

     "JBIC Agent": the meaning given in the JBIC Loan Agreement.

     "JBIC Loan Agreement": the meaning given in Section 2.01(a) of the MPA.

     "JBIC Tranche A Advance": the meaning given in the JBIC Loan Agreement.

     "JBIC Tranche B Advance": the meaning given in the JBIC Loan Agreement.

     "KfW": the meaning given in the preamble of the MPA.

     "KfW Lender": KfW or any assignee of KfW that (i) has purchased Senior
Facility Loans in excess of U.S.$10 million and (ii) has been designated by KfW,
or by the immediate predecessor KfW Lender, by written notice to the
Administrative Agent and the Borrower as the KfW Lender, unless KfW is a
Suspending Lender and the Borrower has entered into a


                                       15

Replacement Loan Agreement with a Replacement Lender that is not an Affiliate of
a Parent Company in which case such Replacement Lender shall become the KfW
Lender.

     "KfW Loan Agreement": the meaning given in Section 2.01(a) of the MPA.

     "Labor Unrest": labor disputes and industrialized actions, including a
strike, interruption, slowdown and other similar action on the part of organized
labor.

     "Lead Arbitration": an arbitration proceeding commenced under the Master
Participation Agreement regarding the occurrence of an Event of Political Force
Majeure.

     "Lead JBIC Arrangers": the meaning given in the preamble of the MPA.

     "Legal Completion Certificate": the certificate referred to in Section
2.01(e) of the Completion Guarantee.

     "LIBOR": the meaning given to such term in the Commercial Banks Loan
Agreement.

     "Lien": with respect to any Property, any mortgage, lien, pledge, charge,
lease, easement, servitude, right of others, security interest or encumbrance of
any kind in respect of such Property. For the purposes of this definition, any
Person shall be deemed to own subject to a Lien any Property which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.

     "Limited Operating Costs": Operating Costs excluding expenditures which are
not essential to the compliance by the Borrower with its obligations under the
Financing Documents or required to operate the Current Operations or the Sulfide
Project in accordance with good industry mining practice or to maintain the
Sulfide Project's actual operating capacity at, or to prevent a material
increase in operating expenses from, the levels contemplated in the Mine Plan
then in effect or to satisfy legal or contractual obligations of the Borrower.

     "Majority Facility Lenders": with respect to any vote or decision to be
made by Senior Facility Lenders, (i) before the Availability Period End Date, a
vote or decision made by (x) Senior Facility Lenders with a cumulative Aggregate
Committed Amount greater than 66 2/3% of the cumulative Aggregate Committed
Amount of all Senior Facility Lenders and (y) at least 4 Senior Facility Lenders
Votes; and (ii) after the Availability Period End Date, a vote or decision made
by (x) Senior Facility Lenders holding Senior Facility Loans with an Outstanding
Advance Amount greater than 66 2/3% of the Outstanding Advance Amount of the
Senior Facility Loans held by all Senior Facility Lenders and (y) at least 4
Senior Facility Lenders Votes.

     "Majority Lenders": with respect to any vote or decision to be made by
Senior Lenders, (i) before the Availability Period End Date, a vote or decision
made by (x) Senior Lenders with, in the case of Senior Facility Lenders, a
cumulative Aggregate Committed Amount and, in the case of Peruvian Bondholders,
an Aggregate Issued Bond Amount greater than 66 2/3% of the sum of the
cumulative Aggregate Committed Amount of all Senior Facility Lenders and the
Aggregate Issued Amount of all Peruvian Bonds and (y) at least 5 Senior Lenders
Votes (or, prior to an issuance of Peruvian Bonds, 4 Senior Facility Lenders
Votes); and (ii) after the


                                       16

Availability Period End Date, a vote or decision made by (x) Senior Lenders
holding Senior Loans with an Outstanding Advance Amount greater than 66 2/3% of
the Outstanding Advance Amount of the Senior Loans held by all Senior Lenders
and (y) at least 5 Senior Lenders Votes (or, prior to an issuance of Peruvian
Bonds, 4 Senior Facility Lenders Votes).

     "Master Participation Agreement" or "MPA": the Master Participation
Agreement, dated as of September 30, 2005, among the MPA Parties.

     "Master Security Agreement" or "MSA": the Master Security Agreement, dated
as of the date of the MPA, among the MSA Parties.

     "Material Adverse Effect": (i) a Material Adverse Lender Effect and/or (ii)
a Material Adverse Project Effect.

     "Material Adverse Lender Effect": a material adverse effect on (i) the
ability of the Borrower to timely pay the Senior Loan Obligations, (ii) the
security interests granted by Borrower pursuant to the Security Documents (other
than to the extent noted in legal opinions of counsel to the Borrower delivered
on or prior to the Closing Date in satisfaction of Section 5.01(g) of the MPA),
(iii) the rights and remedies of the Senior Lenders under any Financing Document
or Project Document, (iv) the Collateral (taken as a whole), (v) the ability of
the Borrower or (prior to the Guarantee Release Date) any Parent Company to
timely perform any of its respective material obligations under any Financing
Document to which it is a party or (vi) the validity or enforceability of any
Financing Document.

     "Material Adverse Project Effect": a material adverse effect on (i) the
ability of the Borrower to complete and operate the Sulfide Project as
contemplated in the Identified Material Project Documents, (ii) the Current
Operations or the Sulfide Project, including the projected costs of
construction, operation or maintenance of the Sulfide Project, or (iii) the
ability of the Borrower or any Parent Company to timely perform any of its
respective material obligations under any Project Document to which it is a
party or (iv) the validity or enforceability of any Project Document.

     "Material Financing Document Amendment": any amendment to any Financing
Document that (i) modifies the period during which any of Senior Facility
Lenders shall be required to make Advances to the Borrower, (ii) deletes
conditions precedent related to the making of any Advances, (iii) changes the
timing of any interest rate payment and/or the manner of computation and amount
of any interest rate payable on any and all Outstanding Advance Amounts, (iv)
changes in the Final Maturity Date, (v) delays the repayment of principal, (vi)
deletes the requirement that all payments by the Borrower of Senior Loan
Obligations shall be made in Dollars; (vii) results in the release or removal of
any of the security interests granted to the Senior Lenders pursuant to the
Security Documents; (viii) changes to the voting thresholds applicable to
decisions of the Senior Facility Lender or Senior Lenders, or (ix) changes to
the Payment Dates or the amount of principal to be repaid on such dates.

     "Maximum Allowed Debt Amount": the meaning given in Schedule A to the
Completion Guarantee.


                                       17

     "Mine Plan": the then effective Three Year Budget Plan together with the
then effective current block model and life of mine plan related thereto.

     "Mines": the mines existing as of the date hereof and located within the
Mining Concessions.

     "Minimum Required Equity Ownership": (i) with respect to each of BVN and
the Sumitomo Participant, 49% of its respective ownership of Restricted Common
Stock on the date hereof and (ii) with respect to the PD Participant, 50.1% of
the then outstanding Common Stock (on a fully diluted basis).

     "Mining Concessions": the mining concessions owned by the Borrower or to be
acquired by the Borrower identified in Schedule A to the MSA.

     "Mining Law": Single Organized Text of the General Mining Act enacted by
Peruvian Supreme Decree No. 014-92-EM, as amended and as may be amended from
time to time.

     "Mizuho": the meaning given in the preamble of the MPA.

     "Mizuho Lender": Mizuho or any assignee of Mizuho that (i) has purchased
Senior Facility Loans in excess of U.S.$10 million and (ii) has been designated
by Mizuho, or by the immediate predecessor Mizuho Lender, by written notice to
the Administrative Agent and the Borrower as the Mizuho Lender.

     "Monthly Transfer Date": after the date of Start-up of Commercial
Production, the 20th day of each calendar month or the next Business Day if the
20th of such calendar month is not a Business Day.

     "Moody's": Moody's Investors Service, Inc.

     "MPA": the Master Participation Agreement.

     "MPA Cessation Notice": the meaning given in Section 9.03 of the MPA.

     "MPA Default": an MPA Event of Default and any event or condition that,
with the giving of notice or lapse of time, or both, would constitute an MPA
Event of Default.

     "MPA Event of Default": the meaning given in Section 9.01 of the MPA.

     "MPA Party": the meaning given in the last paragraph of the Recitals of the
MPA.

     "MSA": the Master Security Agreement.

     "MSA Party": the meaning given in the last paragraph of the Recitals of the
MSA.

     "Net Worth": with respect to any Person, its net worth calculated in
accordance with United States GAAP.


                                       18

     "New Party Accession Agreement": an accession agreement substantially (a)
in the form of Exhibit J to the MSA for an accession agreement to be entered
into by the Common Representative, (b) in the form of Exhibit G-1 to the MPA for
an accession agreement to be entered into by a Replacement Lender and (c) in the
form of Exhibit G-2 to the MPA for an accession agreement to be entered into by
a Bridge Loan Provider.

     "Non-Accelerated Parent Companies": Parent Companies that are not
Accelerated Parent Companies.

     "Non-Domestic Buyer's Consent": the meaning given in Section 3.02(b)(iii)
of the MSA.

     "Non-Domestic Sales": a sale to a Buyer not located in Peru.

     "Non-Domestic Sales Agreement": any Sales Agreement with a Buyer not
located in Peru.

     "Non-Replaceable Property": any of the Core Mining Concessions and any
property of the Borrower that is necessary to the operations of the Business and
which cannot be readily replaced.

     "Non-Variable Certificate": the meaning given in Section 2.01 of the
Completion Guarantee.

     "Notice of Borrowing": a notice requesting an Advance in the form set forth
in the JBIC Loan Agreement, the KfW Loan Agreement or the Commercial Banks Loan
Agreement, as the case may be.

     "Notice Sales Agreement": the meaning given in Section 3.02(b) of the MSA.

     "Notified Cash Shortfall": the meaning given in Section 3.02(a) of the
Completion Guarantee.

     "Nuevos Soles": the lawful currency of Peru.

     "NY Business Day": any day on which banks are generally open for business
in New York, New York, United States.

     "Observation Period": the meaning given in Schedule A to the Completion
Guarantee.

     "Offshore Collateral": the non-Peruvian collateral to be secured from time
to time by Master Security Agreement or any other Security Document, including
(i) the Sales Agreements, (ii) the Assigned Agreements and (iii) the Proceeds
Account.

     "Offshore Collateral Agent": the meaning given in the preamble of the MSA.

     "Offshore Collateral Agent Action": (i) any action (including any Borrower
Enforcement Action) to be taken under the Financing Documents with respect to
the Offshore Collateral, (ii) any action to create, accept, perfect and execute
the Offshore Security Documents and


                                       19

(iii) any and all amendments to the security arrangements set forth in the
Master Security Agreement and to the other Offshore Security Documents.

     "Offshore Security Documents": the Master Security Agreement, and each
other agreement or document, filings, notices, arrangements or the like which
are required to establish and maintain the security interest in the Offshore
Collateral for the benefit of the Secured Parties.

     "Offtake Agreements": the PDC Guarantee, the SMM Concentrate Sales
Agreement, the PD Concentrate Sales Agreement and the PD Cathodes Sales
Agreement.

     "Onshore Accounts": the meaning given in Section 4.01(f) of the MSA.

     "Onshore Accounts Cap": the meaning given in Section 4.15 of the MSA.

     "Onshore Bank": the meaning given in Section 4.01(a)(iii) of the MSA.

     "Onshore Collateral": the Peruvian collateral to be secured from time to
time by Master Security Agreement or any other Security Document, including (i)
currently-owned or after-acquired Project Property, (ii) the Concessions
required to be mortgaged pursuant to the MSA, (iii) the Onshore Accounts to the
extent provided in the MSA, (iv) Insurance and Insurance proceeds and (v) the
SMCV Shares.

     "Onshore Collateral Agent": the meaning given in the preamble of the MSA.

     "Onshore Collateral Agent Action": (i) any action (including any Borrower
Enforcement Action) to be taken under the Financing Documents with respect to
the Onshore Collateral, (ii) any action to create, accept, perfect and execute
the Onshore Security Documents and (iii) any and all amendments to the Onshore
Security Documents.

     "Onshore Dollars Account": the meaning given in Section 4.01(a)(ii) of the
MSA.

     "Onshore Nuevos Soles Account": the meaning given in Section 4.01(a)(iv) of
the MSA.

     "Onshore Project Costs": Project Costs incurred by the Borrower for the
purpose of works performed in Peru, including, without limitation, all amounts
payable pursuant to the Construction Agreement No. CV 12915, dated as of
December 14, 2004, between the Borrower and Fluor Daniel Sucursal Del Peru;

     "Onshore Security Documents": each of the following documents governed by
Peruvian law: (i) the mining mortgages (hipoteca minera), the mining pledge
(prenda minera (equipment, machinery and movable assets), the floating mining
pledge (prenda minera flotante (minerals and Cathode and Concentrate in
inventory), each granted pursuant to Section 3.01 of the MSA, (ii) the
conditional assignments of rights (cesion condicionada de derechos) granted
pursuant to Section 3.02(a)(ii) of the MSA, (iii) the Contrato de Cuenta Escrow
for Onshore Accounts executed pursuant to Section 3.05(b) of the MSA, (iv) the
pledge (prenda) for the SMCV Shares pursuant to Section 3.07 of the MSA, (v) the
civil mortgages (hipoteca), if any, and the industrial pledge (prenda
industrial), if any, each granted pursuant to Section 3.09(b) of the MSA, and
(vi) any other agreement or document, filings, notices, arrangements or the like
which are


                                       20

required to establish and maintain the security interest in the Onshore
Collateral for the benefit of the Senior Lenders.

     "Operating Cash": with respect to any Calculation Period, all operating
revenues of the Borrower accrued during such period and all interest income
earned in the Accounts during such period minus operation, maintenance,
sustaining capital expenditures, taxes payable and other expenses for such
period.

     "Operating Costs": items of liability and expenditure of the Borrower for
purposes of its Business, including, without limiting the generality of the
foregoing, taxes, duties, legally imposed cash reserves or similar obligations,
Operator Fees, fees payable to the Trustee, the Offshore Collateral Agent and
the Onshore Collateral Agent and other service providers under the Financing
Documents, expenditures for spares and other capital goods inventory, Permitted
Hedges, Sustaining Capital Costs, shipping cost (including, without limitation,
all local transport costs and ocean freight), payment of principal and interest
on Permitted Indebtedness and insurance costs, and amounts payable under Sales
Agreements, but excluding Restricted Payments and Senior Loan Obligations.

     "Operating Onshore Dollars Account": the meaning given in Section
4.01(a)(iii) of the MSA.

     "Operating Onshore Nuevos Soles Account": the meaning given in Section
4.01(a)(v) of the MSA.

     "Operator": the meaning given in Recital H of the MPA.

     "Operator Fees": fees payable to the Operator pursuant to Section 4 of the
Operator's Agreement.

     "Operator's Agreement": the meaning given in Recital H of the MPA.

     "Other Taxes": the meaning given in Section 3.09(c) of the MPA.

     "Outstanding Advance Amount": with respect to each Senior Facility Lender,
the sum of its Outstanding Base Amount and, if applicable, its Outstanding
Stand-By Amount and, with respect to the Peruvian Bonds, the corresponding
Outstanding Bond Amount.

     "Outstanding Base Amount": on any date, with respect to each Senior
Facility Lender, the aggregate unpaid amount, on such date, of all Base Advances
made by such Senior Facility Lender.

     "Outstanding Bond Amount": on any date, with respect to the Peruvian Bonds,
the principal amount of Peruvian Bonds outstanding on such date.

     "Outstanding Stand-By Amount": on any date, with respect to each Commercial
Bank, the aggregate unpaid amount, on such date, of all Stand-By Advances made
by such Commercial Bank.


                                       21

     "Parallel Arbitration": an arbitration proceeding commenced under the
Completion Guarantee regarding the occurrence of an Event of Political Force
Majeure.

     "Parent Companies": collectively, PDC, SMM, SC and BVN.

     "Parents": the meaning given in the preamble of the TRA.

     "Partial Completion": the meaning given in Section 2.02 of the Completion
Guarantee.

     "Partial Completion Variable Certificate": the certificate referred to in
Section 2.02 of the Completion Guarantee.

     "Partial Restricted Payment Certificate": the meaning given in Section
7.20(c) of the MPA.

     "Participation Agreement": the meaning given in Recital C of the MPA.

     "Payment Date": the earlier of (i) the March 20 or the September 20 next
occurring after the Commercial Production Start-Up Date and (ii) March 20, 2008,
and, thereafter every March 20 and September 20, until the Final Maturity Date,
provided that if any such date shall fall on a day that is not a Business Day,
the relevant Payment Date shall be the immediately succeeding Business Day.

     "Payor": the meaning given in Section 2.09(a) of the MPA.

     "PC Agreements": collectively, the Completion Guarantee and the Transfer
Restrictions Agreement.

     "PC Cessation Notice": the meaning given in Section 8.04(a) of the
Completion Guarantee.

     "PC Enforcement Action": means taking any legal, equitable or other
remedial action provided under the Completion Guarantee or the Transfer
Restrictions Agreement or any other action available under applicable law
against a given Defaulting Parent Company, provided that actions taken by Senior
Lenders pursuant to Section 8.06 of the Completion Guarantee shall not
constitute "PC Enforcement Action".

     "PC Enforcement Direction": the meaning given to in Section 8.05(a) of the
Completion Guarantee.

     "PC Event of Default": the meaning given in Section 8.01 of the Completion
Guarantee.

     "PC Reimbursement Rights": the meaning given in Section 9.01 of the
Completion Guarantee.

     "PD Affiliate Transferee": an Affiliate Transferee to whom the PD
Participant or a previous PD Affiliate Transferee has transferred Restricted
Common Stock or Subordinated Loans in accordance with Section 2.02(a) of the
TRA.


                                       22

     "PD Cathodes Sales Agreement": the meaning given in Recital G of the MPA.

     "PD Concentrate Sales Agreement": the meaning given in Recital F of the
MPA.

     "PD Participant": the meaning given in the preamble of the TRA.

     "PD Sales Company": the meaning given in Recital F of the MPA.

     "PDC": the meaning given in Recital C of the MPA.

     "PDC Guarantee": the meaning given in Recital G of the MPA.

     "Permitted Ancillary Capital Expenditures": the meaning given in Section
7.15 of the MPA.

     "Permitted Hedges": the meaning given in Section 7.24 of the MPA.

     "Permitted Incremental Capital Expenditures": the meaning given in Section
7.15 of the MPA.

     "Permitted Indebtedness": the meaning given in Section 7.16 of the MPA.

     "Permitted Investment": with respect to all Accounts, any of the following
(denominated in Dollars in the case of the Proceeds Account, the Onshore Dollars
Account and the Operating Onshore Dollars Account and denominated in Nuevos
Soles in the case of the Onshore Nuevos Soles Account and the Operating Onshore
Nuevos Soles Account):

          (i) obligations maturing or capable of redemption by the holder not
     more than six months after the date of acquisition thereof and issued or
     guaranteed by any government, governmental agency or international
     organization similar obligations of which have one of the two highest
     ratings from a credit rating agency of international standing;

          (ii) demand deposits, time deposits, certificates of deposit or other
     obligations (including acceptances) maturing or capable of redemption by
     the holder not more than six months after the date of investment or
     acquisition thereof which are issued, accepted or guaranteed by a bank
     having capital funds and reserves of not less than U.S.$1,000,000,000 (or
     the Equivalent) and a rating (as most recently published) on its
     outstanding senior long-term unsecured, unguaranteed indebtedness of A or
     higher by Standard & Poor's and A2 or higher by Moody's;

          (iii) commercial paper, corporate promissory notes or other
     obligations maturing or capable of redemption by the holder not more than
     six months after the date of acquisition thereof which (1) have, or are
     supported by an unconditional guarantee from a corporation similar
     obligations of which have, one of the two highest ratings from a credit
     rating agency of international standing, or (2) are obligations which are
     supported by an unconditional guarantee or letter of credit from any bank
     referred to in clause (ii) above;


                                       23

          (iv) repurchase agreements fully collateralized by Permitted
     Investments of the type described in clauses (i), (ii) and (iii) above,
     provided that the Permitted Investments that collateralize such repurchase
     agreements may mature or be capable of redemption by the holder more than
     six months after the date of investment or acquisition thereof;

          (v) any other investments so long as the Borrower notifies in writing
     the Administrative Agent of the proposed investment, and the Administrative
     Agent, acting pursuant to written instructions from the Supermajority
     Lenders, consents to such proposal; and

          (vi) money market funds capable of redemption at any time having a
     rating in the highest investment category granted thereby by a recognized
     credit rating agency at the time of acquisition, including any fund for
     which the Trustee or the Offshore Collateral Agent or an Affiliate of the
     Trustee or the Offshore Collateral Agent serves as an investment advisor,
     administrator, shareholder servicing agent, custodian or subcustodian,
     notwithstanding that (A) the Trustee or the Offshore Collateral Agent or an
     Affiliate of the Trustee or the Offshore Collateral Agent charges and
     collects fees and expenses from such funds for services rendered (provided
     that such charges, fees and expenses are on terms consistent with terms
     negotiated at arm's length) and (B) the Trustee or the Offshore Collateral
     Agent charges and collects fees and expenses for services rendered,
     pursuant to this Agreement.

     "Permitted Liens": the meaning given in Section 7.17 of the MPA.

     "Permitted Subordinated Payment": the meaning given in Section 9.01 of the
Completion Guarantee.

     "Person": any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government agency or political subdivision thereof.

     "Peru": The Republic of Peru.

     "Peruvian Bondholders": holders of Peruvian Bonds issued on the Bond
Issuance Date and on each subsequent date of issuance of Peruvian Bonds under
the Peruvian Bonds Indenture, if any.

     "Peruvian Bonds": the meaning given in Section 2.02(a) of the MPA.

     "Peruvian Bonds Cap": the meaning given in Section 2.02(a) of the MPA.

     "Peruvian Bonds Indenture": the meaning given in Section 2.02(a) of the
MPA.

     "Peruvian Bonds Obligations": the obligations to pay the principal of and
interest on the Peruvian Bonds, including any interest accruing after the filing
of a petition in bankruptcy or the commencement of any insolvency or bankruptcy
proceedings with respect to the Borrower, and all commissions, fees, indemnities
and other amounts payable to the Peruvian Bondholders under the Peruvian Bonds
Indenture.


                                       24


     "Peruvian Bonds Program": the meaning given in Section 2.02(a) of the MPA.

     "Peruvian Business Day": any day on which banks are generally open for
business in Arequipa, Peru.

     "Peruvian GAAP": generally accepted accounting principles in Peru as in
effect from time to time.

     "Peruvian Governmental Approval": a Governmental Approval from a
Governmental Authority in Peru.

     "Peruvian Income Tax Act": the Legislative Decree 774 of December 31, 1993,
as amended.

     "Physical Facilities Certificate": the certificate referred to in Section
2.01(c) of the Completion Guarantee.

     "Pillones Dam": the Pillones Dam project that is part of the Hydric
Regulation System of the Sumbay River Basin - Pillones Dam project.

     "Port": the port facility in Matarani, Peru, to be constructed and operated
as part of the Sulfide Project.

     "Port Services Agreement": the Port Services Agreement, dated December 31,
2004, between the Borrower and Terminal Internacional del Sur S.A.

     "Post Calculation Date Excess Repayment Amount": the meaning given in
Schedule A to the Completion Guarantee.

     "Power Generation Facility": a diesel fired combustion turbine that will be
installed near the site of the Mining Concessions and that will be designed,
taking into account other existing Adequate Power Supply Commitments for the
years 2011 to 2015, to provide sufficient power generation capacity for the
Borrower to operate its Business during the years 2011 to 2015.

     "Power Generator Construction Budget": the meaning given in Section
7.13(b)(i) of the MPA.

     "Power Generator Funding Percentage": (i) prior to December 31, 2007, zero,
(ii) during the year 2008, the number of months that have elapsed since January
1, 2008 (counting the month during which such determination is made) divided by
12 (twelve) and multiplied by 100, and (iii) after December 31, 2008, 100%.

     "Power Generator Reserve Amount": as of any date of determination, an
amount equal to (i) the then current Power Generator Construction Budget
multiplied by (ii) the Power Generator Funding Percentage, provided that such
amount shall be equal to zero (x) until December 31, 2007 and (y) after the
Borrower has secured Sufficient Power Supply Commitments.


                                       25

     "Power Generator Reserve Deficiency": as of any date, the difference, if
positive, between the Power Generator Reserve Amount and the funds credited to
the Power Generator Reserve Sub-Account.

     "Power Generator Reserve Excess": as of any date, the difference, if
positive, between the funds credited to the Power Generator Reserve Sub-Account
and the Power Generator Reserve Amount.

     "Power Generator Reserve Sub-Account": the meaning given in Section 4.01(c)
of the MSA.

     "Power Supply Agreements": (i) the Power Supply Agreement (110 MW), dated
December 31, 2004, between the Borrower and ElectroPeru S.A., (ii) the Power
Supply Agreement (46 MW), dated December 31, 2004, between the Borrower and
ElectroPeru S.A., and (iii) the Power Supply Agreement, dated December 29, 2004,
between the Borrower and Empresa de Generacion Electrica de Arequipa S.A. -
EGASA.

     "Pro Rata Basis": (i) with respect to a request for the making of a Base
Advance from the Senior Facility Lenders, a request in which the amount of Base
Advance to be advanced by each Senior Facility Lender on the relevant
Disbursement Date bears the same proportion to the total amount of Base Advances
to be advanced by all Senior Facility Lenders on such date as (x) the Base
Committed Amount of such Senior Facility Lender to (y) the Base Committed
Amounts of all Senior Facility Lenders and (ii) with respect to a request for
the making of a Stand-By Advance from the Commercial Banks, a request in which
the amount of Stand-By Advance to be advanced by each Commercial Bank on the
relevant Disbursement Date bears the same proportion to the total amount of
Stand-By Advances to be advanced by all Commercial Banks on such date as (x) the
Stand-By Committed Amount of such Commercial Bank to (y) the Stand-By Committed
Amounts of all Commercial Banks.

     "Pro Rata Payment": a payment to a Senior Facility Lender on any date on
which a payment of Senior Loan Obligation is paid in which (i) interest paid to
such Senior Facility Lender on such date bears the same proportion to the total
interest payments made or to be made to all Senior Facility Lenders on such date
as (x) the total Senior Loan Obligations for interest due to such Senior
Facility Lender on such date bears to (y) the total Senior Loan Obligations for
interest due to all Senior Facility Lenders on such date, (ii) principal paid or
prepaid to such Senior Facility Lender on such date bears the same proportion to
the total principal payments or prepayments made to all Senior Facility Lenders
on such date as (x) the total Senior Loan Obligations for principal due to such
Senior Facility Lender on such Payment Date bears to (y) the total Senior Loan
Obligations for principal due to all Senior Facility Lenders on such date, in
each case not including any principal payable by way of an acceleration of
principal payable unless each Senior Loan has been accelerated (unless a
Borrower Enforcement Direction has been given, in which case all Senior Loans
will be deemed for purposes of this definition to have been accelerated) and
(iii) fees, commission, indemnities and all amounts other than interest and
principal paid to such Senior Facility Lender on such date bears the same
proportion to the total fees, commissions, indemnities and such other amounts
paid to all Senior Facility Lenders on such date as (x) the total Senior Loan
Obligations for fees, commissions, indemnities and such other amounts due to
such Senior Lender on such date bears to (y) the total Senior Loan


                                       26

Obligations for fees, commission, indemnities and such other amounts due to all
Senior Facility Lenders on such date. If payments cannot be made exactly in such
proportion due to minimum required payment amounts and required integral
multiples of payments under Senior Loan Documents, payments made in amounts as
near as such exactly proportionate amounts as possible shall be deemed to be Pro
Rata Payments.

     "Pro Rata Share": with respect to (i) PDC, 57.720%, (ii) SMM, 18.104%,
(iii) SC, 4.526% and (iv) BVN, 19.650%.

     "Proceeds": all moneys and claims for moneys due and to become due to the
Borrower at any time or from time to time under a Sales Agreement (including
amounts payable by third parties, such as guarantors and letter of credit banks,
in respect of the Buyer's obligations under such a contract) and shall include
prepayments of such amounts, any proceeds of insurance with respect to Sales
Agreements and any damages, arbitration award or other monetary settlement
payable to the Borrower in respect of Sales Agreements.

     "Proceeds Account": the meaning given in Section 4.01(a)(i) of the MSA.

     "Production Full Completion Certificate": the certificate referred to in
Section 2.01(a) of the Completion Guarantee.

     "Production Partial Completion Certificate": the certificate referred to in
Section 2.02(a) of the Completion Guarantee.

     "Project Costs": all costs and expenses to be incurred by the Borrower to
finance and complete the Sulfide Project, including, without limitation, all
costs and expenses incurred in connection with the design, equipment
procurement, installation, construction and start-up of the Sulfide Project, the
grant to the Borrower of the Governmental Approvals and all other easements,
licenses and other real property rights and interests required for the Sulfide
Project, acquisition of an inventory of initial supplies, Ancillary Capital
Expenditures required to complete ancillary projects necessary for the
completion or operation of the Sulfide Project, initial working capital,
interest during construction, initial funding of the Senior Debt Service Reserve
Sub-Account, Extraordinary Major Maintenance Reserve Sub-Account, Tax
Contingency Reserve Sub-Account and Power Generator Reserve Sub-Account and
stamp duties.

     "Project Documents": collectively, the Closing Project Documents and any
other agreement material to the operations of the Sulfide Project that is
entered into after the Closing Date.

     "Project Property": all Property of the Borrower, whether now owned or
hereafter acquired, and wherever located (other than any interest of the
Borrower in the Accounts).

     "Promissory Note": the meaning given in Section 2.08(a) of the MPA.

     "Property": any rights or interest in, to or under property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.


                                       27

     "Purchased Principal Senior Loan Amount": the meaning given in Section
3.03(c) of the Completion Guarantee.

     "RBS": the meaning given in the preamble of the MPA.

     "RBS Lender": RBS or any assignee of RBS that (i) has purchased Senior
Facility Loans in excess of U.S.$10 million and (ii) has been designated by RBS,
or by the immediate predecessor RBS Lender, by written notice to the
Administrative Agent and the Borrower as the RBS Lender.

     "Related Parties": means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisers of such Person and such Person's Affiliates.

     "Release": shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the environment, including the movement of Hazardous Materials through ambient
air, soil, surface water, ground water, wetlands, land or subsurface strata.

     "Remaining Calculation Year": each calendar year starting after the
Calculation Date.

     "Replacement Debt": Indebtedness of the Borrower, the proceeds of which are
used to prepay any of the Senior Loans.

     "Replacement Lender": the meaning given in Section 3.10(b)(i) of the MPA.

     "Replacement Loan Agreement": a loan agreement (w) which is entered into on
terms and conditions no less favorable to the Borrower than the terms and
conditions of the Senior Facility Loan Agreement for the applicable Suspending
Lender being replaced, (x) which provides for payment of principal and interest
on the same dates as principal and interest are payable under the Senior
Facility Loan Agreement for the applicable Suspending Lender (y) does not mature
earlier than the Final Maturity Date and (z) which shall be secured on a pari
passu basis with the other Senior Facility Loan Agreements but which shall not
entitle the lender thereunder (or holder of loans thereunder) to any voting
rights so long as such lender or holder is a Parent Company or an Affiliate
thereof.

     "Required Payment": the meaning given in Section 2.09(a) of the MPA.

     "Required Senior Debt Accumulation Amount": as of any date of
determination, an amount equal to (i) the Senior Debt Service Installment
scheduled to become due and payable on the next Payment Date, multiplied by (ii)
the Required Senior Debt Funding Percentage as of such date.

     "Required Senior Debt Funding Percentage": means, on any date of
determination, the largest of the following percentages applicable on such date:
(i) 100%, if such date is less than one calendar month prior to the next Payment
Date, (ii) 83 1/3%, if such date is less than two calendar months prior to the
next Payment Date, (iii) 66 2/3%, if such date is less than three calendar
months prior to the next Payment Date, (iv) 50%, if such date is less than four
calendar


                                       28

months prior to the next Payment Date, (v) 33 2/3%, if such date is less than
five calendar months prior to the next Payment Date, (vi) 16 2/3%, if such date
is less than six calendar months prior to the next Payment Date, and (vii) zero%
if such date is less than six calendar months prior to the next Payment Date.

     "Required Senior Debt Service Reserve Amount": (i) prior to the date of
Start-up of Commercial Production, zero and (ii) after the Start-up of
Commercial Production, fifty percent (50%) of the next succeeding Senior Debt
Service Installment, provided that, after the Completion Release Date, (x) if
for any Calculation Period ending prior to the date of determination of the
Required Senior Debt Service Reserve Amount, the DSCR is less than 1.5X, the
Required Senior Debt Service Reserve Amount shall become one hundred percent
(100%) of the next succeeding Senior Debt Service Installment until the end of
the next Calculation Period with respect to which the DSCR is equal to or
greater than 1.5 and (y) thereafter, the Required Senior Debt Service Reserve
Amount shall be equal to fifty percent (50%) of the next succeeding Senior Debt
Service Installment until the circumstances described in clause (x) occur in a
subsequent period.

     "Requisite Lenders": with respect to any Senior Lenders Action or Senior
Facility Lenders Action, the relevant majority of Senior Lenders or Senior
Facility Lenders, as the case may be, required to direct the Administrative
Agent to take such Senior Lenders Action or Senior Facility Lenders Action
pursuant to the terms of the Master Security Agreement or MPA, as the case may
be.

     "Reserve Accounts: collectively, the Senior Debt Accumulation Sub-Account,
the Senior Debt Service Reserve Sub-Account, the Extraordinary Major Maintenance
Reserve Sub-Account, the Tax Contingency Reserve Sub-Account, and the Restricted
Payment Sub-Account.

     "Responsible Officer": when used with respect to the Trustee, the Offshore
Collateral Agent or the Onshore Collateral Agent, (a) any officer within the
corporate trust department of the Trustee, the Offshore Collateral Agent or the
Onshore Collateral Agent including any vice president, assistant vice president,
treasurer, assistant treasurer, trust officer or any other officer of the
Trustee who customarily performs functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and (b) who shall have direct
responsibility for the administration of the Master Security Agreement.

     "Restricted Common Stock": the meaning given in Section 2.01 of the TRA.

     "Restricted Payment": any of the following: a dividend (in cash, shares,
other equity interests or securities, property, obligations or otherwise)
declared or paid on, or other payment or distribution of assets or reduction of
capital on account of, or the setting apart of money for a sinking fund or other
analogous fund for, or the purchase, redemption, retirement or other acquisition
of, (i) any shares of any class of capital stock or other equity interest of the
Borrower, (ii) any warrants, options or other rights to acquire any of such
shares or other equity interest (or to make any payments to any Person where the
amount thereof is calculated with reference to the fair market or equity value
of the Borrower) or (iii) any Subordinated Loans. For the avoidance of doubt,
"Restricted Payments" shall not include Operator Fees.


                                       29

     "Restricted Payment Certificate": the meaning given in Section 7.20(c) of
the MPA.

     "Restricted Payment Sub-Account": the meaning given in Section 4.01(b)(v)
of the MSA.

     "Retired Principal Senior Loan Amount": the meaning given in Section
3.03(a) of the Completion Guarantee.

     "Routine Matter": any matter or action to be taken under the Transaction
Documents, that is not material and is routine, ministerial or administrative.

     "Royalty Tax": the consideration created by Peruvian Law No. 28258, as
amended by Peruvian Law No. 28323 and as may be amended from time to time, and
regulated by Peruvian Supreme Decree No. 157-2004-EF, as clarified and
complemented by Peruvian Supreme Decree No. 18-2005-EF and as may be amended
from time to time.

     "Royalty Tax Claim": the meaning given in Section 7.27 of the MPA.

     "Sales Agreement": a contract or agreement entered into by or on behalf of
the Borrower for the sale or other disposition of Concentrates, Cathodes or
other products produced by the Sulfide Project or the Current Operations.

     "SC": the meaning given in Recital C of the MPA.

     "Scheduled Repayment Percentage": on any Payment Date (i) for any Senior
Facility Lender the amount set forth in Schedule B to the Master Participation
Agreement with respect to such Payment Date and (ii) for the holders of Peruvian
Bonds, the amount set forth on the amortization schedule with respect to such
Payment Date in the Peruvian Bonds Indenture.

     "Scotia Capital": The Bank of Nova Scotia.

     "Scotia Capital Lender": Scotia Capital or any assignee of Scotia Capital
that (i) has purchased Senior Facility Loans in excess of U.S.$10 million and
(ii) has been designated by Scotia Capital, or by the immediate predecessor
Scotia Capital Lender, by written notice to the Administrative Agent and the
Borrower as the Scotia Capital Lender.

     "Secured Obligations": all of the obligations of the Borrower now existing
or hereafter as arising under the Master Participation Agreement, the Master
Security Agreement, the Senior Facility Loan Agreements, the Promissory Notes
and the Peruvian Bonds Indenture owed to the Secured Parties.

     "Secured Parties": means the Senior Lenders, the Trustee, the Offshore
Collateral Agent, the Onshore Collateral Agent, the Administrative Agent, and
the JBIC Agent.

     "Security Documents": the Onshore Security Documents and the Offshore
Security Documents.


                                       30

     "Senior Debt Accumulation Sub-Account": the meaning given in Section
4.01(b)(i) of the MSA.

     "Senior Debt Service": with respect to any Calculation Period, the sum of
all principal, interest and financing fees with respect to Senior Loans that has
become due and payable during such period.

     "Senior Debt Service Installment": the aggregate principal of, and interest
and financing fees on, the Senior Loans scheduled to be paid on a specific
Payment Date.

     "Senior Debt Service Reserve Deficiency": as of any date, the difference,
if positive, between the Required Senior Debt Service Reserve Amount and the
funds credited to the Senior Debt Service Reserve Sub-Account.

     "Senior Debt Service Reserve Excess": as of any date, the difference, if
positive, between the funds credited to the Senior Debt Service Reserve
Sub-Account and the Required Senior Debt Service Reserve Amount.

     "Senior Debt Service Reserve Releasable Amount": the meaning given in
Section 4.05(ii) of the MSA.

     "Senior Debt Service Reserve Sub-Account": the meaning given in Section
4.01(b)(ii) of the MSA.

     "Senior Facility Lender Negative CP Notice": the meaning given in Section
2.05(b) of the MPA.

     "Senior Facility Lender Withdrawal Notice": the meaning given in Section
2.05(c) of the MPA.

     "Senior Facility Lenders": JBIC, KfW, Calyon, RBS, Scotia Capital, Mizuho
and their respective assignees.

     "Senior Facility Lenders Action": any action to be taken by or on behalf of
the Senior Facility Lenders pursuant to any Senior Facility Lenders Financing
Documents (including, without limitation, the right to create, accept and
execute any and all amendments, modifications, changes, supplements or waivers
of the Senior Facility Lenders Financing Documents) that is not an Onshore
Collateral Agent Action or an Offshore Collateral Agent Action.

     "Senior Facility Lenders Financing Documents": the Master Participation
Agreement, each Senior Facility Loan Agreement, each Promissory Note, and the
Transfer Restrictions Agreement.

     "Senior Facility Lenders Vote": a vote cast by the Senior Facility Lenders
in accordance with Section 6.09 of the MSA, it being understood that JBIC shall
have 3 Senior Facility Lenders Votes and each other Senior Facility Lender shall
have one Senior Facility Lenders Vote.

     "Senior Facility Loan Agreement": the meaning given in Section 2.01(a) of
the MPA.


                                       31

     "Senior Facility Loans": loans provided by the Senior Facility Lenders as
set forth in the MPA, together with any Replacement Debt.

     "Senior Facility Loans Obligations": the obligations to pay the principal
of and interest on the Senior Facility Loans, including any interest accruing
after the filing of a petition in bankruptcy or the commencement of any
insolvency or bankruptcy proceedings with respect to the Borrower, and all
commissions, fees, indemnities and other amounts payable to the Senior Facility
Lenders under the Master Participation Agreement and their respective Senior
Facility Loan Agreements.

     "Senior Lenders": prior to an issuance of Peruvian Bonds, each Senior
Facility Lender and after an issuance of Peruvian Bonds, collectively, each
Senior Facility Lender and, collectively, the Peruvian Bondholders, it being
understood that the Peruvian Bondholders shall collectively count as only one
Senior Lender.

     "Senior Lenders Action": any action to be taken by or on behalf of the
Senior Lenders pursuant to any Senior Lenders Financing Documents (including,
without limitation, the right to create, accept and execute any and all
amendments, modifications, changes, supplements or waivers of the Senior Lenders
Financing Documents) that is not an Onshore Collateral Agent Action or an
Offshore Collateral Agent Action.

     "Senior Lenders Financing Documents": the Completion Guarantee and each
Security Document.

     "Senior Lenders Vote": a vote cast by the Senior Lenders in accordance with
Section 6.09 of the MSA.

     "Senior Loan Documents": the Senior Facility Loan Agreements and the
Peruvian Bonds Indenture.

     "Senior Loans": prior to an issuance of Peruvian Bonds, the Senior Facility
Loans and, after an issuance of Peruvian Bonds, collectively, the Senior
Facility Loans and the Peruvian Bonds.

     "Senior Loans Obligations": the Senior Facility Loan Obligations and the
Peruvian Bonds Obligations.

     "SGM": the meaning given in Recital C of the MPA.

     "Shareholder": any of the Sumitomo Participant, CCMC, and BVN.

     "Shareholders Agreement": the meaning given in Recital D of the MPA.

     "SMBC": meaning given in the preamble of the MPA.

     "SMCV Shares": the shares of the Borrower held by or on behalf of the
Shareholders at any time.


                                       32

     "SMM": the meaning given in Recital C of the MPA.

     "SMM Concentrate Sales Agreement": the meaning given in Recital E of the
MPA.

     "Special Dividend": the special dividend in the amount of
U.S.$147,172,896.61 paid by the Borrower, on June 1, 2005, to the holders of
record of its Common Stock.

     "Sponsors Share Pledge": the meaning given in Section 3.07 of the MSA.

     "Stability Agreement": the agreement executed by and between the Borrower
and the Ministry of Energy and Mines and dated as of February 13, 1998, pursuant
to which the Peruvian State granted in favor of the Borrower a Contract of
Guarantees and Investment Promotion Measures stabilizing certain legal matters
until its expiration on December 31, 2013.

     "Standard & Poor's": Standard & Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc.

     "Stand-By Advance": the meaning given in Section 2.04(a)(ii) of the MPA.

     "Stand-By Committed Amount": with respect to each Commercial Bank, the
amount set forth opposite its name on Schedule A to the Master Participation
Agreement, in the column titled "Stand-By Committed Amounts," as such amount may
be adjusted from time to time in accordance with the MPA.

     "Start-up of Commercial Production": the issuance by the Borrower of its
first invoice for a shipment of Concentrate produced by the Sulfide Project.

     "Sub-Account": the meaning given in Section 4.01(b) of the MSA.

     "Subordinated Lender": a Person making a Subordinated Loan to the Borrower.

     "Subordinated Loan Agreements": any loan agreement to which the Borrower is
a party and pursuant to which the debt incurred therein is unsecured
indebtedness ranking in payment and upon liquidation junior to the Senior Loans
on the terms set forth in Exhibit A to the Completion Guarantee.

     "Subordinated Loans": unsecured indebtedness of the Borrower to a
Subordinated Lender, whether presently outstanding or hereafter created,
incurred or assumed, that is subordinated to the Senior Loans on the terms set
forth in Exhibit A to the Completion Guarantee.

     "Sufficient Power Supply Commitments": the meaning given in Section 7.13(a)
of the MPA.

     "Sulfide Project": the meaning given in Recital B of the MPA.


                                       33

     "Sumitomo Affiliate Transferee": an Affiliate Transferee to whom the
Sumitomo Participant or a previous Sumitomo Affiliate Transferee has transferred
Restricted Common Stock or Subordinated Loans in accordance with Section 2.02(a)
of the TRA.

     "Sumitomo Parent Companies": collectively, SMM and SC.

     "Sumitomo Participant": the meaning given in Recital C of the MPA.

     "Sumitomo Parties": the meaning given in Recital C of the MPA.

     "Supermajority Facility Lenders": with respect to any vote or decision to
be made by Senior Facility Lenders, (i) before the Availability Period End Date,
a vote or decision made by (x) Senior Facility Lenders with a cumulative
Aggregate Committed Amount greater than 66 2/3% of the cumulative Aggregate
Committed Amount of all Senior Facility Lenders and (y) at least 5 Senior
Facility Lenders Votes; and (ii) after the Availability Period End Date, a vote
or decision made by (x) Senior Facility Lenders holding Senior Facility Loans
with an Outstanding Advance Amount greater than 66 2/3% of the Outstanding
Advance Amount of the Senior Facility Loans held by all Senior Facility Lenders
and (y) at least 5 Senior Facility Lenders Votes.

     "Supermajority Facility Vote": an affirmative vote of the Supermajority
Facility Lenders.

     "Supermajority Lenders": with respect to any vote or decision to be made by
Senior Lenders, (i) before the Availability Period End Date, a vote or decision
made by (x) Senior Lenders with, in the case of Senior Facility Lenders, a
cumulative Aggregate Committed Amount and, in the case of Peruvian Bondholders,
an Aggregate Issued Bond Amount greater than 66 2/3% of the sum of the
cumulative Aggregate Committed Amount of all Senior Facility Lenders and the
Aggregate Issued Amount of all Peruvian Bonds and (y) at least 6 Senior Lenders
Votes (or, prior to an issuance of Peruvian Bonds, 5 Senior Lenders Votes); and
(ii) after the Availability Period End Date, a vote or decision made by (x)
Senior Lenders holding Senior Loans with an Outstanding Advance Amount greater
than 66 2/3% of the Outstanding Advance Amount of the Senior Loans held by all
Senior Lenders and (y) at least 6 Senior Lenders Votes (or, prior to an issuance
of Peruvian Bonds, 5 Senior Lenders Votes).

     "Supermajority Vote": an affirmative vote of the Supermajority Lenders.

     "Supplier Credit Indebtedness": unsecured Indebtedness of the Borrower to
its suppliers.

     "Suspending Lender": the meaning given in Section 3.10 of the MPA.

     "Sustaining Capital Costs": at any time, the capital expenditures
(including repairs and replacement funded by insurance proceeds) of the Borrower
required, in the opinion of the Borrower, to maintain its Business operating at
or near its design capacity.

     "Target Completion Date": the date that is 42 months after the signing date
of the MPA.

     "Tax Contingency Reserve Amount": (i) zero, unless the date of Start-up of
Commercial Production has occurred and Borrower has (x) received a Royalty Tax
Claim, and (y) determined,


                                       34

after consultation with its Independent Public Accountants, that it is required
in accordance with United States GAAP to establish an accounting reserve with
respect to such claim, and (ii) if the date of Start-up of Commercial Production
has occurred and conditions (x) and (y) of the above clause (i) are satisfied,
the amount to be reserved in accordance with United States GAAP on account of
such claim, as determined by Borrower in accordance with Section 7.27 of the
MPA.

     "Tax Contingency Reserve Deficiency": as of any date, the difference, if
positive, between the Tax Contingency Reserve Amount and the funds credited to
the Tax Contingency Reserve Sub-Account.

     "Tax Contingency Reserve Excess": as of any date, the difference, if
positive, between the funds credited to the Tax Contingency Reserve Sub-Account
and the Tax Contingency Reserve Amount.

     "Tax Contingency Reserve Sub-Account": the meaning given in Section
4.01(b)(iv) of the MSA.

     "Taxes": any present and future taxes, levies, imposts, duties, deductions,
withholdings, fees, liabilities and similar charges.

     "Total Loss": the actual total loss of the Business or any event which
short of actual total loss is deemed by the Borrower's insurance carriers to be
a total loss of the Business for purposes of paying claims under its property
and casualty policies.

     "TRA Parties": the meaning given in preamble of the TRA.

     "Transfer": the meaning given in Section 2.01(a) of the TRA.

     "Transfer Restrictions Agreement" or "TRA": the Transfer Restrictions
Agreement, dated as of the date of the MPA, among the TRA Parties.

     "Transferee Accession Agreement": the meaning given in Section 12.13(c) of
the MPA.

     "Transportation Agreements": means (i) the Contrato de Manipuleo, Carga y
Transporte Bi-modal de Concentrado, dated as of June 11, 2005, by and between
the Borrower and Peru Rail S.A., and (ii) the Contrato de Servicios de
Transporte de Catodos de Cobre, Mercaderias y Acido Sulfurico, dated as of June
2, 2003, by and between the Borrower and Transaltisa S.A. (as amended pursuant
to the Primera Clausula Adicional al Contrato de Servicios de Transporte, dated
as of August 6, 2004, by and between the Borrower and Transaltisa S.A.).

     "Trustee": the meaning given in the preamble to the MSA.

     "United States": the United States of America.

     "United States GAAP": generally accepted accounting principles in the
United States as in effect from time to time.


                                       35

     "War": war (declared or undeclared), civil war, revolution, insurrection,
civil strife or terrorism (other than any such acts undertaken primarily to
achieve labor or student objectives) in Peru which directly and proximately
causes (i) cessation of substantially all construction or operation of the
Sulfide Project for a period of at least 30 consecutive days and renders it
unreasonable or impossible without unreasonable risk of physical harm to Sulfide
Project workers at the Sulfide Project site to resume significant construction
or operation activities at the Sulfide Project or (ii) damage to or destruction
of Sulfide Project Property to such extent that it would be unreasonable for the
Borrower to proceed to completion of the Sulfide Project.

     "Water License": the water license to be granted to the Borrower and giving
to the Borrower the right to use the necessary volumes of water for the Sulfide
Project.

     "Withdrawal Certificate": a certificate substantially in the form of
Exhibit N to the MSA furnished by the Borrower to the Trustee, the Offshore
Collateral Agent and the Onshore Collateral Agent, as the case may be, which
sets forth the amounts to be withdrawn from time to time from the Proceeds
Accounts.

     "Working Capital Debt": unsecured, unguaranteed debt of the Borrower to
commercial banks having a final stated maturity not in excess of one year to be
used solely to fund working capital needs of the Borrower and for day-to-day
cash management purposes.

     "Y": the lawful currency of Japan.


                                       36

                                             EXHIBIT A - Form of hipoteca minera

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for the MINING MORTGAGE
AGREEMENT entered into by and between:

(1)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _____, identified with _____ No. _____, as per power of
     attorney registered in Entry Card _____ of File No. _____ of the Public
     Registry of Companies for Lima (the "Borrower"); and

(2)  CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
     Peru, with Taxpayer Registry No. _____, duly represented by _____,
     identified with _____ No. _____, as per power of attorney registered in
     Entry Card _____ of File No. _____ of the Public Registry of Companies for
     Lima (together with its successors and assigns, the "Onshore Collateral
     Agent").

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities, for the operation of the Cerro
     Verde copper mine (the "Mine"), including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru.

1.2  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project"), for which purposes the Borrower intends to obtain
     financing in an approximate amount of Four Hundred and Fifty Million
     Dollars of the United States of America (US$ 450,000,000.00).

1.3  The Borrower has entered into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.4  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the Borrower undertaken by each of these financial institutions in
     accordance with the Master Participation Agreement as described in Exhibit
     1 and as more fully set forth in each relevant agreement.

1.5  The Borrower intends to issue the Peruvian Bonds in the Peruvian market
     through a bond program in order to complete the financing that it requires
     for the development of the Sulfide Project.

1.6  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent in order to
     set forth, among other things, the terms of the security interests to be
     granted by the Borrower in favor of the Onshore Collateral Agent, who acts
     for the benefit and on behalf of the Secured Parties, to secure the timely
     and full payment or prepayment of the Secured Obligations. The Senior
     Lenders have appointed Citibank del Peru S.A. as Onshore Collateral Agent
     in the Master Security Agreement. The intent of the parties to the Master
     Security Agreement is that, prior to the first issuance of the Peruvian
     Bonds, the Common Representative will enter into a New Party Accession
     Agreement and thereupon the Peruvian Bondholders, acting through the Common
     Representative will, collectively, have all of the rights and obligations
     of a Senior Lender under the Master Security Agreement, including, without
     limitation, the right of the Common Representative, on behalf of the
     Peruvian Bondholders, to benefit as a Senior Lender from the security to be
     granted by the Borrower to the Secured Parties pursuant to the Master
     Security Agreement and the other Security Documents, including, without
     limitation, the security interest created by this Agreement.

1.7  Pursuant to the Master Security Agreement, the Borrower has undertaken to
     secure the Secured Obligations by granting a mining mortgage over the Core
     Mining Concessions listed in Exhibit 2.

1.8  The Borrower and the Onshore Collateral Agent have entered into this
     Agreement for the purpose of creating a mining mortgage over the Core
     Mining Concessions and the Buildings and Facilities in favor of the Onshore
     Collateral Agent, for the benefit and on behalf of the Secured Parties.

2.   INTERPRETATION

2.1  The Exhibits hereto form part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibits hereto.

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference.

     In addition, for the exclusive purpose of this Agreement, the following
     capitalized words and expressions shall have the meanings set forth below:

          "Agreement": means this Mining Mortgage Agreement.


                                                                               2

          "Buildings and Facilities": has the meaning set forth in Section
     5.1(b).

          "Business Day": means a day (other than a Saturday or a Sunday) on
     which banks are open for business in Lima, Peru.

          "Civil Code": means the Civil Code approved by Legislative Decree 295,
     as amended.

          "Code of Civil Procedure": means the General Revised Text of the Code
     of Civil Procedure approved by Legislative Decree 768, as amended.

          "Core Mining Concessions": means, collectively, the Cerro Verde Mining
     Concession 1, 2, 3, the Beneficiation Concession, Tiabaya 4 and Tiabaya 10
     (as described in further detail on Exhibit 2 attached hereto).

          "General Mining Law": means the General Revised Text of the General
     Mining Law approved by Supreme Decree No. 014-92-EM, as amended.

          "Guaranty": means the Core Mining Concessions and all Buildings and
     Facilities, as well as all rights to insurance and expropriation
     compensations without any limitation that Borrower may be entitled to for
     any loss, destruction, deterioration or expropriation of any of the
     foregoing.

          "Lien's Amount": has the meaning set forth in Section 4.1.

          "Mining Mortgage": has the meaning set forth in Section 3.1.

          "Parties": means the parties to this Agreement; and "Party" means any
     one of them.

          "Regulations": means the regulations to the General Mining Law
     approved by Supreme Decree No. 03-94-EM, as amended.

          "Update": has the meaning set forth in Section 5.5.

3.   PURPOSE AND TERM OF THE MINING MORTGAGE

3.1  Pursuant to Article 172 et seq. of the General Mining Law and Articles
     1097, 1104 and 1107 of the Civil Code, the Borrower, as the sole and
     exclusive owner of the Core Mining Concessions and the Buildings and
     Facilities, hereby grants a first and preferential ranking mining mortgage
     (the "Mining Mortgage") over each and all of the Core Mining Concessions
     and all Buildings and Facilities, in favor of the Onshore Collateral Agent,
     for the benefit and on behalf of the Secured Parties, as security for the
     timely and full payment or prepayment by the Borrower of the Secured
     Obligations.


                                                                               3

3.2  This Mining Mortgage secures the Secured Obligations of the Borrower with
     the Secured Parties on a pari passu basis. Accordingly, all Secured Parties
     shall share on the security interest created herein as well as on any and
     all proceeds resulting from the enforcement thereof as contemplated in
     Section 12.

3.3  The Onshore Collateral Agent shall be the only Party entitled to exercise
     any and all rights and prerogatives hereunder, including, without
     limitation, any enforcement action, and shall exercise such rights and
     prerogatives solely in accordance with the provisions of this Agreement and
     the Master Security Agreement.

4.   LIEN'S AMOUNT

4.1  The Parties hereby agree that the amount of the lien created by this Mining
     Mortgage is the total amount of the Secured Obligations, which principal
     amount is an amount not to exceed Four Hundred and Fifty Million Dollars of
     the United States of America (US$ 450,000,000.00), plus all applicable
     interest, expenses and fees as well as any and all judicial costs and
     expenses ("costas y costos") in the event that a judicial proceeding to
     foreclose and sell the Guaranty is necessary (the "Lien's Amount").

4.2  The Parties hereby agree that:

     (a)  the total amount secured by this Mining Mortgage shall include any
          amount which may be payable to the Secured Parties pursuant to Section
          4.1; and

     (b)  the Lien's Amount shall not limit in any manner the exercise by the
          Onshore Collateral Agent of its rights and/or remedies pursuant to the
          terms and conditions of this Agreement and the relevant provisions of
          the Master Security Agreement.

4.3  The Borrower and the Onshore Collateral Agent may agree, from time to time,
     subject to the terms and conditions of the Master Security Agreement, to
     reduce the Lien's Amount under this Mining Mortgage in accordance with
     Article 1115 of the Civil Code, provided that the Lien's Amount resulting
     from such reduction fully covers its Secured Obligations. Accordingly, the
     Onshore Collateral Agent, for the benefit and on behalf of the Secured
     Parties, subject to the terms and conditions of the Master Security
     Agreement, hereby undertakes to execute and deliver any and all documents
     and public deeds that may be required in order to reflect such reduction
     promptly upon the agreement of the Borrower and the Onshore Collateral
     Agent. The Borrower hereby waives its right under Article 1116 of the Civil
     Code to request any judge for the reduction of the Lien's Amount.


                                                                               4

5.   EXTENT OF THE MORTGAGE

5.1  This Mining Mortgage comprises, to the fullest extent permitted by law,
     each and every right and asset, which by fact or by law pertains to the
     Mine and the Core Mining Concessions. Such rights and assets include
     without limitation:

     (a)  the Core Mining Concessions;

     (b)  the buildings and facilities owned by the Borrower, that exist and/or
          may be incorporated in the future, as applicable, located within the
          internal boundaries of the Core Mining Concessions, as well as any and
          all improvements to the same. Such buildings and facilities are listed
          and described (including their respective location and respective
          valuation) in Exhibit 3, as amended from time to time (collectively,
          the "Buildings and Facilities"); and

     (c)  any and all payments made under any insurance policy in respect of the
          Buildings and Facilities, as well as any and all compensation that the
          Borrower may be entitled to because of the expropriation of the Core
          Mining Concessions and/or the Buildings and Facilities;

     provided that the goods and assets comprising this Mining Mortgage shall
     not include those goods and assets that are pledged by the Borrower to the
     Onshore Collateral Agent, for the benefit and on behalf of the Secured
     Parties, pursuant to the Mining Pledge Agreement of even date herewith.

5.2  The Buildings and Facilities constitute integral or accessory parts and
     appurtenances of the Core Mining Concessions pursuant to the provisions of
     Article 142 of the Regulations and Articles 1101, 887 and 888 of the Civil
     Code.

5.3  The Parties hereby agree and acknowledge that only buildings and facilities
     owned or to be owned by the Borrower that have an individual book value
     equal to or in excess of Three Hundred Thousand Dollars of the United
     States of America (US$ 300,000.00) are or, as the case may be, will be
     listed in Exhibit 3 and secured by this Mining Mortgage; provided that such
     threshold shall be reduced in the circumstances specified in the Master
     Security Agreement.

5.4  Pursuant to the terms of the Master Security Agreement, the Borrower has
     agreed to amend this Mining Mortgage in order to incorporate into this
     Mining Mortgage any and all other Peruvian mining concessions necessary to
     operate the Current Operations and/or the Sulfide Project that the Borrower
     may acquire from time to time after the date of this Agreement and before
     this Agreement is terminated pursuant to Section 6.2. Accordingly, the
     Borrower hereby undertakes to execute from time to time but, unless a
     Borrower Event of Default is Continuing, at the request of the Onshore
     Collateral Agent, the required documents and public deeds necessary to
     modify and include as part of Exhibit 2, along with all of the Core Mining
     Concessions already listed therein, any and all other Peruvian mining
     concessions acquired by the Borrower after the date of this


                                                                               5

     Agreement and before this Agreement is terminated pursuant to Section 6.2
     that are necessary to operate the Current Operations and/or the Sulfide
     Project, from the time Exhibit 2 was last modified, amended or restated.

5.5  Pursuant to the terms of the Master Security Agreement, the Borrower has
     also agreed to amend this Mining Mortgage, from time to time before this
     Agreement is terminated pursuant to Section 6.2, by way of updating Exhibit
     3. Accordingly, the Borrower hereby undertakes to execute any and all
     documents and public deeds (each an "Update") necessary in order to modify
     and include as part of Exhibit 3, along with all of the Buildings and
     Facilities already listed therein, the description and location of any
     Buildings and Facilities that have been built, erected and/or installed
     within the internal boundaries of any of the Core Mining Concessions and
     the Peruvian mining concessions referred to in Section 5.4, if any, and
     that have an individual book value equal to or in excess of Three Hundred
     Thousand Dollars of the United States of America (US$ 300,000.00) (or a
     lower individual book value as noted in Section 5.3), from the time Exhibit
     3 was last modified, amended or restated, with independence of the
     accumulated value of the Buildings and Facilities built, erected and/or
     installed, provided that the Borrower shall only be required to perform the
     periodic amendment obligations described in this Section 5.5 if any
     modification is produced, in accordance with the following:

     (a)  Prior to the Completion Release Date, two (2) Updates per year with
          the first Update to be executed within six months following the date
          of this Agreement, and thereafter every six months;

     (b)  On or prior to (but no more than three (3) months prior to) the
          Completion Release Date, provided that the Update described in this
          Section 5.5(b) shall not be required in the event that an Update has
          been executed less than three (3) months before the Completion Release
          Date; and

     (c)  Following the Completion Release Date, one (1) Update per year with
          the first Update to be executed within the first twelve (12) months
          following the Completion Release Date, and thereafter every twelve
          (12) months.

5.6  This Mining Mortgage is granted exclusively in favor of the Onshore
     Collateral Agent for the benefit and on behalf of the Secured Parties.

6.   INDIVISIBILITY OF THE GUARANTY

6.1  This Mining Mortgage and the Guaranty subject hereto (as a whole or
     considering its individual parts) are indivisible and are intended to
     secure the timely and full payment or prepayment by the Borrower of the
     Secured Obligations.

6.2  Except to the extent set forth in Section 10, this Mining Mortgage shall
     remain in force and effect until the earlier of (i) all Secured Obligations
     have been paid or prepaid in full, even if this Mining Mortgage and/or the
     Guaranty is divided or (ii) so long as the Senior


                                                                               6

     Facility Loans Obligations have been paid or prepaid in full, the Borrower,
     with the consent of the Onshore Collateral Agent, seeks to terminate this
     Agreement as contemplated under Section 7.03 of the Peruvian Bonds
     Indenture. The Guaranty shall not be totally or partially cancelled,
     discharged, removed or separated from this Mining Mortgage, until all of
     the Secured Obligations have been paid or prepaid in full by the Borrower
     (in the case of clause (i)) or the Onshore Collateral Agent so consents (in
     the case of clause (ii)).

6.3  Notwithstanding the foregoing and subject to Section 11.2, it is agreed
     that any of the Buildings and Facilities shall be released from this Mining
     Mortgage to the extent that the Borrower disposes of any such Buildings and
     Facilities in accordance with the terms of Section 7.07 of the Master
     Participation Agreement.

7.   OBLIGATIONS OF THE BORROWER

7.1  The Borrower hereby undertakes the following:

     (a)  To take all actions and issue and deliver all private and public
          documents that may be required to formalize, perfect, maintain and/or
          foreclose upon the Guaranty;

     (b)  To file the public deed resulting from this Agreement for recordation
          before the applicable Public Registry within ten (10) Business Days
          following the execution of such public deed by all of the Parties and
          obtain the registration thereof in such applicable Public Registry on
          or before the Closing Date. For any and all amendments to this Mining
          Mortgage pursuant to Sections 5.4 or 5.5, the Borrower hereby
          undertakes to file the respective public deeds for recordation before
          the applicable Public Registry within ten (10) Business Days following
          the execution of such public deed by all of the Parties and obtain the
          registration thereof in such applicable Public Registry within ninety
          (90) days following the execution; provided that so long as the
          Borrower is exercising commercially reasonable efforts to obtain the
          registration, such ninety (90) days period shall be extended to one
          hundred and eighty (180) days;

     (c)  To pay all applicable derechos de vigencia, taxes, expenses and any
          other obligation, including license fees and penalties, applicable to
          the Guaranty;

     (d)  To comply with the obligations set forth in Sections 5.4 and 5.5; and

     (e)  To pay all expenses, including, without limitation, notarial and
          registration fees in connection with this Mining Mortgage, the Updates
          and any modification or amendment to this Agreement.


                                                                               7

8.   REPRESENTATIONS AND WARRANTIES

8.1  As of the date hereof, the Borrower makes the following representations and
     warranties to the Onshore Collateral Agent:

     (a)  It is the sole and exclusive owner of or has legal title to the Core
          Mining Concessions and Buildings and Facilities, as applicable, and it
          has therefore full right, power, and authority to enter into this
          Agreement without violating any contractual, legal, or other
          obligation to any entity or person;

     (b)  Upon registration, this Mining Mortgage will create a first and
          preferential ranking mining mortgage over the Core Mining Concessions
          and the Buildings and Facilities;

     (c)  The Core Mining Concessions and the Buildings and Facilities are in
          good standing, free from any lien and encumbrance other than this
          Mining Mortgage and are not subject to any judicial or extra-judicial
          measure that in any way may limit its free ownership and availability;
          and

     (d)  The Borrower has timely paid all derechos de vigencia pertaining to
          the Core Mining Concessions.

9.   FORECLOSURE OF THE GUARANTY

9.1  Foreclosure and enforcement of the Guaranty shall only be made in
     accordance with the terms of the Master Security Agreement and this Section
     9.

9.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take Borrower Enforcement Action with respect to
     the Guaranty pursuant to the terms of the Master Security Agreement, the
     Onshore Collateral Agent shall have the right to proceed to foreclose upon
     the Guaranty. Such foreclosure upon the Guaranty shall take place in
     accordance with the following procedures:

     (a)  Judicial Action ("ejecucion judicial")

          The Guaranty shall only be foreclosed in whole or in part upon through
          a judicial procedure in accordance with Article 720 et seq. of the
          Code of Civil Procedure, before the judges of the judicial district of
          Arequipa - Cercado.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.


                                                                               8

     (b)  Assessment of the Guaranty

          Subject to the following paragraph, for all purposes concerning the
          enforcement of the Guaranty, the aggregate value of the Core Mining
          Concessions, including the Buildings and Facilities, is US$ _____ (as
          more fully set forth in Exhibits 2 and 3); provided that such
          aggregate value shall be review and adjusted to reflect (i) any and
          all additional Peruvian mining concessions and/or Buildings and
          Facilities as described in Sections 5.4 and 5.5 and (ii) the cost of
          the Sulfide Project upon completion thereof.

          Upon a Borrower Event of Default and while it is Continuing, the
          Onshore Collateral Agent shall have the right to request an appraisal
          of the Guaranty, which appraisal shall be performed by any one of the
          pre-approved appraisers listed in Exhibit 4 or any other appraiser
          agreed to by the Parties, in which case for all purposes concerning
          the enforcement of the Guaranty the aggregate value of the Core Mining
          Concessions, including the Buildings and Facilities, shall be the
          aggregate value thereof as determined by such appraiser in such
          appraisal.

          The equivalent of 2/3 of the above mentioned amount (as amended or
          appraised) shall serve as the basic value of the Core Mining
          Concessions, including the Buildings and Facilities, for the first
          auction undertaken within a foreclosure proceeding pursuant to this
          Section 9, subsequently reducing said value, according to law, for any
          subsequent auction, as the case may be.

9.3  The Borrower hereby waives its right to make any claim in connection with
     the foreclosure upon the Guaranty against the Onshore Collateral Agent to
     the extent that the Onshore Collateral Agent fully complies with the
     procedure for foreclosure set forth in this Section 9 and the relevant
     provisions of the Master Security Agreement.

10.  OBLIGATION OF THE ONSHORE COLLATERAL AGENT

     The Onshore Collateral Agent hereby covenants and agrees to promptly
     release this Mining Mortgage, and to take all actions necessary to
     formalize such release, in the event that (i) prior to the occurrence of
     the Closing Date and prior to the issuance of any Peruvian Bonds, the
     Borrower terminates and reduces all Commitments to zero, or (ii) this
     Mining Mortgage no longer remains in full force and effect as provided in
     Section 6.2.

11.  ASSIGNMENT AND RELEASE OF THE MINING MORTGAGE

11.1 The Borrower hereby expressly grants its prior written consent, in
     accordance with Article 1435 of the Civil Code, to the assignment of this
     Agreement ("cesion de posicion contractual") by the Onshore Collateral
     Agent to any successor or assign of the Onshore


                                                                               9

     Collateral Agent appointed by the Senior Lenders pursuant to the Master
     Security Agreement.

11.2 The release of the Mining Mortgage requires express and written
     confirmation by the Onshore Collateral Agent and must be formalized by
     means of a public deed recorded with the applicable Public Registry.
     Subject to Section 10, the Onshore Collateral Agent hereby undertakes,
     promptly upon the Borrower's request if pursuant to Section 6.3, to execute
     and deliver any and all documents and public deed that may be required to
     formalize such release at the cost of the Borrower.

12.  PROCEEDS OF THE FORECLOSURE OF THE GUARANTY

In the event that the Guaranty is foreclosed upon in accordance with Section 9,
the proceeds of such foreclosure shall be allocated in accordance with the
applicable rules under the Code of Civil Procedure and in accordance with the
order of priority and terms set forth in Section 4.18 of the Master Security
Agreement. Once the Secured Obligations have been paid or prepaid in full, any
balance of the proceeds of the sale of the Guaranty shall be paid and delivered
to the Borrower.

13.  NOTICES

Any notice, request, demand, consent, designation, direction, instruction,
certificate and other required communications to be given hereunder between the
Parties shall be in writing and shall be addressed, respectively, as follows, or
to such other address as may be hereafter furnished for this purpose by such
Party:

     If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager
          Facsimile: (51-54) 283-376


                                                                              10

          with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona  85004
          United States of America
          Attention: _____
          Facsimile: _____

     If to the Onshore Collateral Agent, at:

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040

14.  GOVERNING LAW AND JURISDICTION

14.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

14.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, enforcement
     or interpretation of this Agreement shall be resolved before the judges of
     the judicial district of Arequipa - Cercado; provided that the Parties
     agree that any disputes arising out of or in connection with the terms of
     the Master Security Agreement shall not be resolved as set forth in this
     Section 14.2 but shall be resolved pursuant to the terms of the Master
     Security Agreement.

15.  SEVERABILITY

     If any provision of this Agreement is or becomes invalid, illegal or
     unenforceable, it shall, to the extent possible, be modified in such manner
     as to be valid, legal and enforceable but so as most nearly to retain the
     intent of the Parties. If such modification is not possible, such provision
     shall be severed from this Agreement. In either case the validity, legality
     and enforceability of the remaining provisions of this Agreement shall not
     in any way be affected or impaired thereby.

16.  AMENDMENTS

     Neither this Agreement nor any terms hereof may be amended, supplemented or
     modified other than pursuant to a written instrument executed by (i) the
     Borrower and (ii) the Onshore Collateral Agent.


                                                                              11

Mr. Notary, please add the pertinent introduction and conclusion as required by
law and forward the corresponding notices to the Public Registry for the
recording of this Agreement.

                                                              Lima,  _____, 2005

SOCIEDAD MINERA CERRO VERDE S.A.A.


- -----------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- -----------------------------
By:
Title:


                                                                              12

                                    EXHIBIT 1

                           DESCRIPTION OF COMMITMENTS

Commitments to lend to the Borrower under the JBIC Loan Agreement:

     Aggregate commitment: _____
     Final maturity date: _____
     Interest rates: _____

Commitments to lend to the Borrower under the KfW Loan Agreement:

     Aggregate commitment: _____
     Final maturity date: _____
     Interest rates: _____

Commitments to lend to the Borrower under the Commercial Banks Loan Agreement:

     Aggregate commitment: _____
     Final maturity date: _____
     Interest rates: _____


                                                                              13

                                    EXHIBIT 2

             LIST, DESCRIPTION AND VALUE OF CORE MINING CONCESSIONS


                                                                              14

                                    EXHIBIT 3

        LIST, DESCRIPTION, LOCATION AND VALUE OF BUILDINGS AND FACILITIES


                                                                              15

                                    EXHIBIT 4

                         LIST OF PRE-APPROVED APPRAISERS

Name:      Apoyo Consultoria
Address:   Calle Gonzales Larranaga 265
           San Antonio, Lima 18
           Peru
Phone:     (51-1) 213-1100
Fax:       (51-1) 241-4032

Name:      Macroconsult
Address:   Calle General Borgono 1156
           Lima 18
           Peru
Phone:     (51-1) 221-2695
Fax:       (51-1) 221-2696

Name:      Interinvest
Address:   Av. Carlos Villaran 140
           Torre A, 18th floor
           Lima 13
           Peru
Phone:     (51-1) 219-2200
Fax:       (51-1) 219-2220

Name:      Enfoca - Gestion Empresarial
Address:   Los Pinos 222
           Lima 27
           Peru
Phone:     (51-1) 222-0808
Fax:       _____

Name:      Alonso y Asociados
Address:   Av. Republica de Panama 3030
           Of. 701
           Lima 27
           Peru
Phone:     (51-1) 463-1818 and (51-1) 463-5616
Fax:       _____


                                                                              16

                                               EXHIBIT B - Form of prenda minera
                                       (equipment, machinery and movable assets)

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for the MINING PLEDGE
AGREEMENT entered into by and between:

(1)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _____, identified with _____ No. _____, as per power of
     attorney registered in Entry Card _____ of File No. _____ of the Public
     Registry of Companies for Lima (the "Borrower"); and

(2)  CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
     Peru, with Taxpayer Registry No. _____, duly represented by _____,
     identified with _____ No. _____, as per power of attorney registered in
     Entry Card _____ of File No. _____ of the Public Registry of Companies for
     Lima (together with its successors and assigns, the "Onshore Collateral
     Agent").

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities, for the operation of the Cerro
     Verde copper mine, including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru (the "Existing Mine").

1.2  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project" and, together with the Existing Mine, the "Mines"),
     for which purposes the Borrower intends to obtain financing in an
     approximate amount of Four Hundred and Fifty Million Dollars of the United
     States of America (US$ 450,000,000.00).

1.3  The Borrower has entered into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.4  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the Borrower undertaken by each of these financial institutions in
     accordance with the Master Participation Agreement.

1.5  The Borrower intends to issue the Peruvian Bonds in the Peruvian market
     through a bond program in order to complete the financing that it requires
     for the development of the Sulfide Project.

1.6  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent in order to
     set forth, among other things, the terms of the security interests to be
     granted by the Borrower in favor of the Onshore Collateral Agent, who acts
     for the benefit and on behalf of the Secured Parties, to secure the timely
     and full payment or prepayment by the Borrower of the Secured Obligations.
     The Senior Lenders have appointed Citibank del Peru S.A. as Onshore
     Collateral Agent in the Master Security Agreement. The intent of the
     parties to the Master Security Agreement is that, prior to the first
     issuance of the Peruvian Bonds, the Common Representative will enter into a
     New Party Accession Agreement and thereupon the Peruvian Bondholders acting
     through the Common Representative will, collectively, have all of the
     rights and obligations of a Senior Lender under the Master Security
     Agreement, including, without limitation, the right of the Common
     Representative, on behalf of the Peruvian Bondholders, to benefit as a
     Senior Lender from the security to be granted by the Borrower to the
     Secured Parties pursuant to the Master Security Agreement and the other
     Security Documents, including, without limitation, the security interest
     created by this Agreement.

1.7  Pursuant to the Master Security Agreement, the Borrower has undertaken to
     secure the Secured Obligations by granting a mining pledge over certain
     Goods and Assets permanently used in connection with the mining activities
     of the Borrower at the Mines.

1.8  The Borrower and the Onshore Collateral Agent have entered into this
     Agreement for the purpose of creating a mining pledge over the Goods and
     Assets in favor of the Onshore Collateral Agent, for the benefit and on
     behalf of the Secured Parties.

2.   INTERPRETATION

2.1  The Exhibits hereto form part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibits hereto.

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference.

     In addition, for the exclusive purpose of this Agreement, the following
     capitalized words and expressions shall have the meanings set forth below:

          "Agreement": means this Mining Pledge Agreement.


                                                                               2

          "Business Day": means a day (other than a Saturday or a Sunday) on
     which banks are open for business in Lima, Peru.

          "Civil Code": means the Civil Code approved by Legislative Decree 295,
     as amended.

          "Code of Civil Procedure": means the General Revised Text of the Code
     of Civil Procedure approved by Legislative Decree 768, as amended.

          "Core Mining Concessions": means, collectively, the Cerro Verde Mining
     Concession 1, 2, 3, the Beneficiation Concession, Tiabaya 4 and Tiabaya 10
     (as described in further detail on Exhibit 1 attached hereto).

          "General Mining Law": means the General Revised Text of the Mining Law
     approved by Supreme Decree No. 014-92-EM, as amended.

          "Goods and Assets": has the meaning set forth in Section 5.1.

          "Guaranty": means all Goods and Assets as well as all rights to
     insurance and expropriation compensations without any limitation that the
     Borrower may be entitled to for any loss, destruction, deterioration or
     expropriation of any of the foregoing.

          "Lien's Amount": has the meaning set forth in Section 4.1.

          "Mining Pledge": has the meaning set forth in Section 3.1.

          "Parties": means the parties to this Agreement; and "Party" means any
     one of them.

          "Regulations": means the regulations to the General Mining Law
     approved by Supreme Decree No. 03-94-EM, as amended.

          "Update": has the meaning set forth in Section 5.3.

3.   PURPOSE AND TERM OF THE MINING PLEDGE

3.1  Pursuant to Article 178 et seq. of the General Mining Law and Articles 1055
     and 1057 of the Civil Code, the Borrower, as the sole and exclusive owner
     of the Core Mining Concessions and the Goods and Assets, hereby grants a
     first and preferential ranking mining pledge (the "Mining Pledge") over any
     and all of the Goods and Assets in favor of the Onshore Collateral Agent,
     for the benefit and on behalf of the Secured Parties, as security for the
     timely and full payment or prepayment by the Borrower of the Secured
     Obligations.


                                                                               3

3.2  This Mining Pledge secures the Secured Obligations of the Borrower with the
     Secured Parties on a pari passu basis. Accordingly, all Secured Parties
     shall share on the security interest created herein as well as on any and
     all proceeds resulting from the enforcement thereof as contemplated in
     Section 12.

3.3  The Onshore Collateral Agent shall be the only party entitled to exercise
     any and all rights and prerogatives hereunder, including without limitation
     any Borrower Enforcement Action, and shall exercise such rights and
     prerogatives solely in accordance with the provisions of this Agreement and
     the Master Security Agreement.

4.   LIEN'S AMOUNT

4.1  The Parties hereby agree that the amount of the lien created by this Mining
     Pledge is the total amount of the Secured Obligations, which principal
     amount is an amount not to exceed Four Hundred and Fifty Million Dollars of
     the United States of America (US$ 450,000,000.00), plus all applicable
     interest, expenses and fees as well as any and all costs and expenses
     ("costas y costos") in the event that the foreclosure of the Guaranty is
     necessary (the "Lien's Amount").

4.2  The Parties hereby agree that:

     (a)  the total amount secured by this Mining Pledge shall include any
          amount which may be payable to the Secured Parties pursuant to Section
          4.1; and

     (b)  the Lien's Amount shall not limit in any manner the exercise by the
          Onshore Collateral Agent of its rights and/or remedies pursuant to the
          terms and conditions of this Agreement and the relevant provisions of
          the Master Security Agreement.

4.3  The Borrower and the Onshore Collateral Agent may agree, from time to time,
     subject to the terms and conditions of the Master Security Agreement, to
     reduce the Lien's Amount under this Mining Pledge in accordance with
     Articles 1083 and 1115 of the Civil Code, provided that the Lien's Amount
     resulting from such reduction fully covers its Secured Obligations.
     Accordingly, the Onshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, subject to the terms and conditions of the Master
     Security Agreement, undertakes to execute and deliver any and all documents
     and public deeds that may be required in order to reflect such reduction
     promptly upon the agreement of the Borrower and the Onshore Collateral
     Agent. The Borrower hereby waives its right under Articles 1083 and 1116 of
     the Civil Code to request any judge for the reduction of the Lien's Amount.

4.4  The Borrower hereby waives its right under Article 1073 of the Civil Code
     to request any judge for the substitution of this Mining Pledge.


                                                                               4

5.   EXTENT OF THE MINING PLEDGE

5.1  This Mining Pledge comprises, to the fullest extent permitted by law, each
     and every right and asset, which by fact or by law pertains to the
     equipment, machinery and movable assets owned by the Borrower and used by
     the Borrower in connection with its mining activities on the Core Mining
     Concessions (as identified on Exhibit 2 hereto, as may be amended from time
     to time, the "Goods and Assets"), and all insurance and expropriation
     compensations that the Borrower may be entitled to for any loss,
     destruction, deterioration or expropriation of any of the foregoing. The
     Parties acknowledge that the Goods and Assets are located within the
     internal boundary of the Core Mining Concessions.

5.2  The Parties hereby agree and acknowledge that only equipment, machinery and
     movable assets owned or to be owned by the Borrower that have an individual
     book value equal to or in excess of Three Hundred Thousand Dollars of the
     United States of America (US$300,000.00) are or, as the case may be, will
     be listed on Exhibit 2 and included in this Mining Pledge; provided that
     such threshold shall be reduced in the circumstances specified in the
     Master Security Agreement. The Parties hereby further agree that all such
     equipment, machinery and movable assets shall remain in possession of the
     Borrower until the Borrower has received a Borrower Enforcement Direction
     with respect to the Guaranty pursuant to the terms of the Master Security
     Agreement.

5.3  Pursuant to the terms of the Master Security Agreement, the Borrower has
     agreed to amend this Mining Pledge, from time to time before this Agreement
     is terminated pursuant to Section 6.2, by way of updating Exhibit 2.
     Accordingly, the Borrower hereby undertakes to execute any and all
     documents and public deeds (each, an "Update") necessary to modify and
     include as part of Exhibit 2, along with all of the Goods and Assets
     already listed therein, a description of any Good and Asset acquired by the
     Borrower that have an individual book value equal to or in excess of Three
     Hundred Thousand Dollars of the United States of America (US$ 300,000.00)
     (or a lower individual book value as noted in Section 5.2), from the time
     Exhibit 2 was last modified, amended or restated, with independence of the
     accumulated value of the Good and Asset acquired; provided that the
     Borrower shall only be required to perform the periodic amendment
     obligations described in this Section 5.3 if any modification is produced
     in accordance with the following:

     (a)  Prior to the Completion Release Date, two (2) Updates per year with
          the first Update to be executed within six months following the date
          of this Agreement, and thereafter every six months;

     (b)  On or prior to (but no more than three (3) months prior to) the
          Completion Release Date, provided that the Update described in this
          Section 5.3(b) shall not be required in the event that an Update has
          been executed less than three (3) months before the Completion Release
          Date; and


                                                                               5

     (c)  Following the Completion Release Date, one (1) Update per year with
          the first Update to be executed within the first twelve (12) months
          following the Completion Release Date, and thereafter every twelve
          (12) months.

5.4  This Mining Pledge is granted exclusively in favor of the Onshore
     Collateral Agent for the benefit and on behalf of the Secured Parties.

6.   INDIVISIBILITY OF THE GUARANTY

6.1  This Mining Pledge and the Guaranty subject hereto (as a whole or
     considering its individual parts) are indivisible and are intended to
     secure the timely and full payment or prepayment by the Borrower of the
     Secured Obligations.

6.2  Except to the extent set forth in Section 10, this Mining Pledge shall
     remain in force and effect until the earlier of (i) all the Secured
     Obligations have been paid or prepaid in full, even if this Mining Pledge
     and/or the Guaranty is divided or (ii) so long as the Senior Facility Loans
     Obligations have been paid or prepaid in full, the Borrower, with the
     consent of the Onshore Collateral Agent, seeks to terminate this Agreement
     as contemplated under Section 7.03 of the Peruvian Bonds Indenture. The
     Guaranty shall not be totally or partially cancelled, discharged, removed
     or separated from this Mining Pledge, until all of the Secured Obligations
     have been paid or prepaid in full by the Borrower (in the case of clause
     (i)) or the Onshore Collateral Agent so consents (in the case of clause
     (ii)).

6.3  Notwithstanding the foregoing and subject to Section 11.2, it is agreed
     that any of the Goods and Assets shall be released from the Mining Pledge
     to the extent that the Borrower disposes of any such Goods and Assets in
     accordance with the terms of Section 7.07 of the Master Participation
     Agreement.

7.   OBLIGATIONS OF THE BORROWER

7.1  The Borrower hereby undertakes the following:

     (a)  To take all actions and issue and deliver all private and public
          documents that may be required to formalize, perfect, maintain and/or
          foreclose upon the Guaranty;

     (b)  To file the public deed resulting from this Agreement for recordation
          before the applicable Public Registry within ten (10) Business Days
          following the execution of such public deed by all of the Parties and
          obtain the registration thereof in such applicable Public Registry on
          or before the Closing Date. For any and all Updates, the Borrower
          hereby undertakes to file the respective public deeds for recordation
          before the applicable Public Registry within ten (10) Business Days
          following the execution of such public deed by all of the Parties and
          obtain the registration


                                                                               6

          thereof in such applicable Public Registry within ninety (90) days
          following the execution; provided that so long as the Borrower is
          exercising commercially reasonable efforts to obtain the registration,
          such ninety (90) days period shall be extended to one hundred and
          eighty (180) days;

     (c)  To comply with the obligations set forth in Section 5.3; and

     (d)  To pay all expenses, including, without limitation, notarial and
          registration fees in connection with this Mining Pledge, the Updates
          and any modification and amendment to this Agreement.

8.   REPRESENTATIONS AND WARRANTIES

8.1  As of the date hereof, the Borrower makes the following representations and
     warranties to the Onshore Collateral Agent:

     (a)  It is the sole and exclusive owner of or has legal title to the Goods
          and Assets, and it has therefore full right, power, and authority to
          enter into this Agreement without violating any contractual, legal, or
          other obligation to any entity or person;

     (b)  The Goods and Assets are located within the premises of the Core
          Mining Concessions or ancillary facilities and are used by the
          Borrower in connection with its mining activities at the Mines;

     (c)  Upon registration, this Mining Pledge will create a first and
          preferential ranking mining pledge over the Goods and Assets; and

     (d)  The Goods and Assets are free from any liens and encumbrances other
          than this Mining Pledge and are not subject to any judicial or
          extra-judicial measure that in any way may limit its free ownership
          and availability.

9.   FORECLOSURE OF THE GUARANTY

9.1  Foreclosure and enforcement of the Guaranty shall only be made in
     accordance with the terms of the Master Security Agreement and this Section
     9.

9.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take Borrower Enforcement Action with respect to
     the Guaranty pursuant to the terms of the Master Security Agreement, the
     Onshore Collateral Agent shall have the right to proceed to foreclose upon
     the Guaranty. Such foreclosure upon the Guaranty shall take place in
     accordance with either of the procedures set forth in (a) and (b) below:


                                                                               7

     (a)  Private Sale

          The Guaranty may be foreclosed upon in whole or in part through a
          direct sale or a public or private auction procedure in accordance
          with Article 183 of the General Mining Law and Article 1069 of the
          Civil Code. Such sale or auction shall be carried out by the Onshore
          Collateral Agent, acting as instructed by the Administrative Agent, in
          a commercially reasonable manner.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

          If the Guaranty is foreclosed through an auction, such auction shall
          be performed by an authorized auctioneer designated by the Onshore
          Collateral Agent. The auction may take place where the Goods and
          Assets are located or at any other place that may be determined by the
          Onshore Collateral Agent. The Onshore Collateral Agent shall provide
          no less than twenty (20) days notice in advance of such auction, which
          such notice shall include an identification of the designated
          auctioneer.

          To the extent permitted by applicable Peruvian law and the Master
          Security Agreement, the Onshore Collateral Agent shall have the right
          to bid for and purchase the Goods and Assets offered for sale at the
          auction described herein, and upon compliance with the terms of the
          sale may hold and dispose of such property.

     (b)  Judicial Action ("ejecucion judicial")

          Alternatively, the Guaranty may be foreclosed in whole or in part upon
          through a judicial procedure in accordance with Article 720 et seq. of
          the Code of Civil Procedure, before the judges of the judicial
          district of Arequipa - Cercado.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

     (c)  Assessment of the Guaranty

          Subject to the following paragraph, for all purposes concerning the
          enforcement of the Guaranty, the aggregate value of the Goods and
          Assets shall be US$_____ (as more fully set forth on Exhibit 2);
          provided that such aggregate value shall be reviewed and adjusted with
          the addition of further Goods and Assets pursuant to the amendment
          obligations of the Borrower described in Section 5.3.

          Upon a Borrower Event of Default and while it is Continuing, the
          Onshore Collateral Agent shall have the right to request an appraisal
          of the Guaranty,


                                                                               8

          which appraisal shall be performed by any one of the pre-approved
          appraisers listed in Exhibit 3 or any other appraiser agreed to by the
          Parties, in which case for all purposes concerning the enforcement of
          the Guaranty the aggregate value of the Goods and Assets shall be the
          aggregate value thereof as determined by such appraiser in such
          appraisal.

          If the Guaranty is foreclosed upon through a judicial procedure as
          referred to in Section 9.2(b), the equivalent of 2/3 of the above
          mentioned amount (as amended or appraised) shall serve as the basic
          value of the Goods and Assets for the first auction undertaken within
          such foreclosure proceeding, subsequently reducing said value,
          according to law, for any subsequent auctions, as the case may be.

9.3  The Borrower hereby waives its right to make any claim in connection with
     the foreclosure upon the Guaranty against the Onshore Collateral Agent to
     the extent that the Onshore Collateral Agent fully complies with the
     procedure for foreclosure set forth in this Section 9 and the relevant
     provisions of the Master Security Agreement.

10.  OBLIGATION OF THE ONSHORE COLLATERAL AGENT

The Onshore Collateral Agent hereby covenants and agrees to promptly release
this Mining Pledge, and to take all actions necessary to formalize such release,
in the event that (i) prior to the occurrence of the Closing Date and prior to
the issuance of any Peruvian Bonds, the Borrower terminates and reduces all
Commitments to zero, or (ii) this Mining Pledge no longer remains in full force
and effect as provided in Section 6.2.

11.  ASSIGNMENT AND RELEASE OF THE MINING PLEDGE

11.1 The Borrower hereby expressly grants its prior written consent, in
     accordance with Article 1435 of the Civil Code, to the assignment of this
     Agreement ("cesion de posicion contractual") by the Onshore Collateral
     Agent to any successor or assign of the Onshore Collateral Agent appointed
     by the Senior Lenders pursuant to the Master Security Agreement.

11.2 The release of the Mining Pledge requires express and written confirmation
     by the Onshore Collateral Agent, on behalf of the Secured Parties, and must
     be formalized by means of a public deeds recorded with the applicable
     public registry. Subject to Section 10, the Onshore Collateral Agent hereby
     undertakes, promptly upon the Borrower's request if pursuant to Section
     6.3, to execute and deliver any and all documents and public deeds that may
     be required to formalize such release at the cost of the Borrower.


                                                                               9

12.  PROCEEDS OF THE FORECLOSURE OF THE GUARANTY

12.1 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(a), the proceeds of such foreclosure shall be allocated by the
     Onshore Collateral Agent in accordance with the order of priority and terms
     set forth in Section 4.18 of the Master Security Agreement. Once the
     Secured Obligations have been paid or prepaid in full, any balance of the
     proceeds of the sale of the Guaranty shall be paid and delivered to the
     Borrower.

12.2 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(b), the proceeds of such foreclosure shall be allocated in
     accordance with the applicable rules under the Code of Civil Procedure and
     in accordance with the order of priority and terms set forth in Section
     4.18 of the Master Security Agreement. Once the Secured Obligations have
     been paid or prepaid in full, any balance of the proceeds of the sale of
     the Guaranty shall be paid and delivered to the Borrower.

13.  NOTICES

Any notice, request, demand, consent, designation, direction, instruction,
certificate and other required communications to be given hereunder between the
Parties shall be in writing and shall be addressed, respectively, as follows, or
to such other address as may be hereafter furnished for this purpose by such
Party:

     If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager
          Facsimile: (51-54) 283-376
          with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          United States of America
          Attention: _____
          Facsimile: _____


                                                                              10

     If to the Onshore Collateral Agent, at:

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040


14.  GOVERNING LAW AND JURISDICTION

14.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

14.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, enforcement
     or interpretation of this Agreement shall be resolved before the judges of
     the judicial district of Arequipa - Cercado; provided that the Parties
     agree that any disputes arising out of or in connection with the terms of
     the Master Security Agreement shall not be resolved as set forth in this
     Section 14.2 but will be resolved pursuant to the terms of the Master
     Security Agreement.

15.  SEVERABILITY

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as most nearly to retain the intent of
the Parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.

16.  AMENDMENTS

Neither this Agreement nor any terms hereof may be amended, supplemented or
modified other than pursuant to a written instrument executed by (i) the
Borrower and (ii) the Onshore Collateral Agent.

Mr. Notary, please add the pertinent introduction and conclusion as required by
law and forward the corresponding notices to the Public Registry for the
recording of this Agreement.


                                                                              11

                                                                  Lima, __, 2005

SOCIEDAD MINERA CERRO VERDE S.A.A.


- -----------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- -----------------------------
By:
Title:


                                                                              12

                                    EXHIBIT 1

                         LIST OF CORE MINING CONCESSIONS


                                                                              13

                                    EXHIBIT 2

                 LIST, DESCRIPTION AND VALUE OF GOODS AND ASSETS


                                                                              14

                                    EXHIBIT 3

                         LIST OF PRE-APPROVED APPRAISERS

Name:      Apoyo Consultoria
Address:   Calle Gonzales Larranaga 265
           San Antonio, Lima 18
           Peru
Phone:     (51-1) 213-1100
Fax:       (51-1) 241-4032


Name:      Macroconsult
Address:   Calle General Borgono 1156
           Lima 18
           Peru
Phone:     (51-1) 221-2695
Fax:       (51-1) 221-2696


Name:      Interinvest
Address:   Av. Carlos Villaran 140
           Torre A, 18th floor
           Lima 13
           Peru
Phone:     (51-1) 219-2200
Fax:       (51-1) 219-2220


Name:      Enfoca - Gestion Empresarial
Address:   Los Pinos 222
           Lima 27
           Peru
Phone:     (51-1) 222-0808
Fax:       _____


Name:      Alonso y Asociados
Address:   Av. Republica de Panama 3030
           Of. 701
           Lima 27
           Peru
Phone:     (51-1) 463-1818 and (51-1) 463-5616
Fax:       _____


                                                                              15

                                               EXHIBIT C - Form of prenda minera
                             (minerals and Cathode and Concentrate in inventory)

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for the MINING FLOATING PLEDGE
AGREEMENT entered into by and between:

(1)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _____, identified with _____ No. _____, as per power of
     attorney registered in Entry Card _____ of File No. _____ of the Public
     Registry of Companies for Lima (the "Borrower"); and

(2)  CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
     Peru, with Taxpayer Registry No. _____, duly represented by _____,
     identified with _____ No. _____, as per power of attorney registered in
     Entry Card _____ of File No. _____ of the Public Registry of Companies for
     Lima (together with its successors and assigns, the "Onshore Collateral
     Agent").

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities, for the operation of the Cerro
     Verde copper mine, including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru (the "Existing Mine").

1.2  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project" and, together with the Existing Mine, the "Mines"),
     for which purposes the Borrower intends to obtain financing in an
     approximate amount of Four Hundred and Fifty Million Dollars of the United
     States of America (US$ 450,000,000.00).

1.3  The Borrower has entered into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.4  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the Borrower undertaken by each of these financial institutions in
     accordance with the Master Participation Agreement.

1.5  The Borrower intends to issue the Peruvian Bonds in the Peruvian market
     through a bond program in order to complete the financing that it requires
     for the development of the Sulfide Project.

1.6  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent in order to
     set forth, among other things, the terms of the security interests to be
     granted by the Borrower in favor of the Onshore Collateral Agent, who acts
     for the benefit and on behalf of the Secured Parties, to secure the timely
     and full payment or prepayment by the Borrower of the Secured Obligations.
     The Senior Lenders have appointed Citibank del Peru S.A. as Onshore
     Collateral Agent in the Master Security Agreement. The intent of the
     parties to the Master Security Agreement is that, prior to the first
     issuance of the Peruvian Bonds, the Common Representative will enter into a
     New Party Accession Agreement and thereupon the Peruvian Bondholders acting
     through the Common Representative will, collectively, have all of the
     rights and obligations of a Senior Lender under the Master Security
     Agreement, including, without limitation, the right of the Common
     Representative, on behalf of the Peruvian Bondholders, to benefit as a
     Senior Lender from the security to be granted by the Borrower to the
     Secured Parties pursuant to the Master Security Agreement and the other
     Security Documents, including, without limitation, the security interest
     created by this Agreement.

1.7  Pursuant to the Master Security Agreement, the Borrower has undertaken to
     secure the Secured Obligations by granting a mining floating pledge over
     mineral to be extracted from the Mines located within the Core Mining
     Concessions, Cathode and Concentrate.

1.8  The Borrower and the Onshore Collateral Agent have entered into this
     Agreement for the purpose of creating a mining floating pledge over the
     Mineral, Cathode and Concentrate in favor of the Onshore Collateral Agent,
     for the benefit and on behalf of the Secured Parties.

2.   INTERPRETATION

2.1  The Exhibits hereto form part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibits hereto.

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference.

     In addition, for the exclusive purpose of this Agreement, the following
     capitalized words and expressions shall have the meanings set forth below:


                                                                               2

          "Agreement": means this Mining Floating Pledge Agreement.

          "Business Day": means a day (other than a Saturday or a Sunday) on
     which banks are open for business in Lima, Peru.

          "Cathode and Concentrate": has the meaning set forth in Section 3.1.

          "Civil Code": means the Civil Code approved by Legislative Decree 295,
     as amended.

          "Code of Civil Procedure": means the General Revised Text of the Code
     of Civil Procedure approved by Legislative Decree 768, as amended.

          "Core Mining Concessions": means, collectively, the Cerro Verde Mining
     Concession 1, 2, 3, the Beneficiation Concession, Tiabaya 4 and Tiabaya 10
     (as described in further detail on Exhibit 1 attached hereto).

          "General Mining Law": means the of the General Revised Text of the
     Mining Law approved by Supreme Decree No. 014-92-EM, as amended.

          "Guaranty": means all Mineral, Cathode and Concentrate as well as all
     rights to insurance and expropriation compensations without any limitation
     that the Borrower may be entitled to for any loss, destruction,
     deterioration or expropriation of any of the foregoing.

          "Lien's Amount": has the meaning set forth in Section 4.1.

          "Mineral": has the meaning set forth in Section 3.1.

          "Mining Pledge": has the meaning set forth in Section 3.1.

          "Parties": means the parties to this Agreement; and "Party" means any
     one of them.

          "Regulations": means the regulations to the General Mining Law
     approved by Supreme Decree No. 03-94-EM, as amended.

3.   PURPOSE AND TERM OF THE MINING PLEDGE

3.1  Pursuant to Article 178 et seq. of the General Mining Law and Articles 1055
     and 1057 of the Civil Code, the Borrower, as the sole and exclusive owner
     of the Core Mining Concessions, hereby grants a first and preferential
     ranking mining floating pledge (the "Mining Pledge") over (i) all minerals
     extracted from the Mines and located within the internal boundaries of any
     of the Core Mining Concessions without any limitation, which, for the
     avoidance of doubt, shall include mineral in any form until it is
     transformed into


                                                                               3

     cathode and/or concentrate (the "Mineral"); and (ii) all inventory of
     copper cathodes and copper concentrates to be produced by the Borrower that
     is extracted from the Mines which are located within the internal
     boundaries of any of the Core Mining Concessions without any limitation
     ("Cathode and Concentrate") in favor of the Onshore Collateral Agent, for
     the benefit and on behalf of the Secured Parties, as security for the
     timely and full payment or prepayment by the Borrower of the Secured
     Obligations. This Mining Pledge extends, without any limitation, to any and
     all (i) Mineral and (ii) inventories of Cathode and Concentrate, if any,
     from time to time.

3.2  The Mineral shall become subject to the Mining Pledge automatically upon
     its extraction from the Mines or beneficiation, and shall continue to be
     subject to this Mining Pledge whether such Mineral is at field, in transit
     or in treatment.

3.3  The Cathode and Concentrate shall become subject to the Mining Pledge once
     processed from the Mineral and shall continue to be subject to this Mining
     Pledge whether such Cathode and Concentrate is in the Mines' facilities,
     being processed or in transit.

3.4  Considering the fungible nature of the Mineral and Cathode and Concentrate,
     this Mining Pledge is granted as a floating lien. Accordingly, the Mineral
     and Cathode and Concentrate shall be automatically released from the Mining
     Pledge upon its sale or other disposition and delivery by the Borrower to
     the respective buyer or its agent. The Onshore Collateral Agent hereby
     undertakes, promptly upon the Borrower's request, to execute and deliver
     any and all documents that may be required, if any, to formalize such
     release.

3.5  This Mining Pledge secures the Secured Obligations of the Borrower with the
     Secured Parties on a pari passu basis. Accordingly, all Secured Parties
     shall share on the security interest created herein as well as on any and
     all proceeds resulting from the enforcement thereof as contemplated in
     Section 12.

3.6  The Onshore Collateral Agent shall be the only party entitled to exercise
     any and all rights and prerogatives hereunder, including without limitation
     any Borrower Enforcement Action, and shall exercise such rights and
     prerogatives solely in accordance with the provisions of this Agreement and
     the Master Security Agreement.

4.   LIEN'S AMOUNT

4.1  The Parties hereby agree that the amount of the lien created by this Mining
     Pledge is the total amount of the Secured Obligations, which principal
     amount is an amount not to exceed Four Hundred and Fifty Million Dollars of
     the United States of America (US$ 450,000,000.00), plus all applicable
     interest, expenses and fees as well as any and all costs and expenses
     ("costas y costos") in the event that the foreclosure of the Guaranty is
     necessary (the "Lien's Amount").


                                                                               4

4.2  The Parties hereby agree that:

     (a)  the total amount secured by this Mining Pledge shall include any
          amount which may be payable to the Secured Parties pursuant to Section
          4.1; and

     (b)  the Lien's Amount shall not limit in any manner the exercise by the
          Onshore Collateral Agent of its rights and/or remedies pursuant to the
          terms and conditions of this Agreement and the relevant provisions of
          the Master Security Agreement.

4.3  The Borrower and the Onshore Collateral Agent may agree, from time to time,
     subject to the terms and conditions of the Master Security Agreement, to
     reduce the Lien's Amount under this Mining Pledge in accordance with
     Articles 1083 and 1115 of the Civil Code, provided that the Lien's Amount
     resulting from such reduction fully covers its Secured Obligations.
     Accordingly, the Onshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, subject to the terms and conditions of the Master
     Security Agreement, hereby undertakes to execute and deliver any and all
     documents and public deeds that may be required in order to reflect such
     reduction promptly upon the agreement of the Borrower and the Onshore
     Collateral Agent. The Borrower hereby waives its right under Articles 1083
     and 1116 of the Civil Code to request any judge for the reduction of the
     Lien's Amount.

4.4  The Borrower hereby waives its right under Article 1073 of the Civil Code
     to request any judge for the substitution of this Mining Pledge.

5.   EXTENT OF THE MINING PLEDGE

5.1  This Mining Pledge comprises, to the fullest extent permitted by law, each
     and every right and asset, which by fact or by law pertains to the Mineral
     and Cathode and Concentrate including, without limitation, all insurance
     and expropriation compensations that the Borrower may be entitled to for
     any loss, destruction, deterioration or expropriation of any of the
     foregoing.

5.2  The Parties hereby agree and acknowledge that the Borrower shall remain in
     possession of any and all Mineral and Cathode and Concentrate and is
     entitled to process, treat, dispose of and/or sell any or all of such
     Mineral and Cathode and Concentrate which is extracted, produced and
     acquired from the Mines pursuant to any contract, agreement or
     understanding, currently existing or that the Borrower may enter into in
     the future, for the sale thereof. As provided in Section 3.4, all Mineral
     and Cathode and Concentrate that is sold pursuant to this Section 5.2 shall
     be automatically released from this Mining Pledge.

5.3  This Mining Pledge is granted exclusively in favor of the Onshore
     Collateral Agent for the benefit and on behalf of the Secured Parties.


                                                                               5

6.   INDIVISIBILITY OF THE GUARANTY

6.1  This Mining Pledge and the Guaranty subject hereto (as a whole or
     considering its individual parts) are indivisible and are intended to
     secure the timely and full payment or prepayment by the Borrower of the
     Secured Obligations.

6.2  Except to the extent set forth in Section 10, this Mining Pledge shall
     remain in force and effect until the earlier of (i) all the Secured
     Obligations have been paid or prepaid in full, even if this Mining Pledge
     and/or the Guaranty is divided or (ii) so long as the Senior Facility Loans
     Obligations have been paid or prepaid in full, the Borrower, with the
     consent of the Onshore Collateral Agent, seeks to terminate this Agreement
     as contemplated under Section 7.03 of the Peruvian Bonds Indenture.

7.   OBLIGATIONS OF THE BORROWER

7.1  The Borrower hereby undertakes the following:

          (a)  To take all actions and issue and deliver all private and public
               documents that may be required to formalize, perfect, maintain
               and/or foreclose upon the Guaranty;

          (b)  To file the public deed resulting from this Agreement for
               recordation before the applicable Public Registry within ten (10)
               Business Days following the execution of such public deed by all
               of the Parties and obtain the registration thereof in such
               applicable Public Registry on or before the Closing Date.; and

          (c)  To pay all expenses, including, without limitation, notarial and
               registration fees in connection with this Mining Pledge and any
               modification or amendment to this Agreement.

8.   REPRESENTATIONS AND WARRANTIES

8.1  As of the date hereof, the Borrower makes the following representations and
     warranties to the Onshore Collateral Agent:

     (a)  It is the sole and exclusive owner of or has legal title to the
          Mineral and Cathode and Concentrate, as applicable, and it has
          therefore full right, power, and authority to enter into this
          Agreement without violating any contractual, legal, or other
          obligation to any entity or person;

     (b)  Upon registration, this Mining Pledge will create a first and
          preferential ranking mining floating pledge over the Mineral and
          Cathode and Concentrate; and


                                                                               6

     (c)  The Mineral and Cathode and Concentrate, as the case may be, are free
          from any lien and encumbrance other than this Mining Pledge and are
          not subject to any judicial or extra-judicial measure that in any way
          may limit its free ownership and availability.

9.   FORECLOSURE OF THE GUARANTY

9.1  Foreclosure and enforcement of the Guaranty shall only be made in
     accordance with the terms of the Master Security Agreement and this Section
     9.

9.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take a Borrower Enforcement Action with respect to
     the Guaranty pursuant to the terms of the Master Security Agreement, the
     Onshore Collateral Agent shall have the right to proceed to foreclose upon
     the Guaranty. Such foreclosure upon the Guaranty shall take place in
     accordance with either of the procedures set forth in (a) and (b) below:

     (a)  Private Sale

          The Guaranty may be foreclosed upon in whole or in part through a
          direct sale or a public or private auction procedure in accordance
          with Article 183 of the General Mining Law and Article 1069 of the
          Civil Code. Such sale or auction shall be carried out by the Onshore
          Collateral Agent, acting as instructed by the Administrative Agent, in
          a commercially reasonable manner.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

          If the Guaranty is foreclosed through an auction, such auction shall
          be performed by an authorized auctioneer designated by the Onshore
          Collateral Agent. The auction may take place where the Mineral and
          Cathode and Concentrate are located or at any other place that may be
          determined by the Onshore Collateral Agent. The Onshore Collateral
          Agent shall provide no less than twenty (20) days notice in advance of
          such auction, which such notice shall include an identification of the
          designated auctioneer.

          To the extent permitted by applicable Peruvian law and the Master
          Security Agreement, the Onshore Collateral Agent shall have the right
          to bid for and purchase the Mineral and Cathode and Concentrates
          offered for sale at the auction described herein, and upon compliance
          with the terms of the sale may hold and dispose of such property.


                                                                               7

     (b)  Judicial Action ("ejecucion judicial")

          Alternatively, the Guaranty may be foreclosed in whole or in part upon
          through a judicial procedure in accordance with Article 720 et seq. of
          the Code of Civil Procedure, before the judges of the judicial
          district of Arequipa - Cercado.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

     (c)  Assessment of the Guaranty

          Subject to the following paragraph, for all purposes concerning the
          enforcement of the Guaranty, considering the commodity nature of the
          Mineral and Cathode and Concentrate, the value of the Mineral and
          Cathode and Concentrate being foreclosed upon shall be that which
          results from the market price thereof at the time of the direct sale
          or initiation of the auction proceeding.

          Upon a Borrower Event of Default and while it is Continuing, the
          Onshore Collateral Agent shall have the right to request an appraisal
          of the Guaranty, which appraisal shall be performed by any one of the
          pre-approved appraisers listed in Exhibit 2 or any other appraiser
          agreed to by the Parties, in which case for all purposes concerning
          the enforcement of the Guaranty the aggregate value of the Mineral and
          Cathode and Concentrate being foreclosed upon shall be the aggregate
          value thereof as determined by such appraiser in such appraisal.

          If the Guaranty is foreclosed upon through a judicial procedure as
          referred to in Section 9.2(b), the equivalent of 2/3 of the above
          mentioned amount (as appraised) shall serve as the basic value of the
          Mineral and Cathode and Concentrate being foreclosed upon for the
          first auction undertaken within such foreclosure proceeding,
          subsequently reducing said value, according to law, for any subsequent
          auctions, as the case may be.

9.3  The Borrower hereby waives its right to make any claim in connection with
     the foreclosure upon the Guaranty against the Onshore Collateral Agent to
     the extent that the Onshore Collateral Agent fully complies with the
     procedure for foreclosure set forth in this Section 9 and the relevant
     provisions of the Master Security Agreement.

10.  OBLIGATION OF THE ONSHORE COLLATERAL AGENT

     The Onshore Collateral Agent hereby covenants and agrees to promptly
     release this Mining Pledge, and to take all actions necessary to formalize
     such release, in the event that (i) prior to the occurrence of the Closing
     Date and prior to the issuance of any Peruvian Bonds, the Borrower
     terminates and reduces all Commitments to zero, or (ii) this Mining Pledge
     no longer remains in full force and effect as provided in Section 6.2.


                                                                               8

11.  ASSIGNMENT AND RELEASE OF THE MINING PLEDGE

11.1 The Borrower hereby expressly grants its prior written consent, in
     accordance with Article 1435 of the Civil Code, to the assignment of this
     Agreement ("cesion de posicion contractual") by the Onshore Collateral
     Agent to any successor or assign of the Onshore Collateral Agent appointed
     by the Senior Lenders pursuant to the Master Security Agreement.

11.2 The release of the Mining Pledge over the Mineral and Cathode and
     Concentrate requires express and written confirmation by the Onshore
     Collateral Agent, on behalf of the Secured Parties, and must be formalized
     by means of a public deed recorded with the applicable Public Registry.
     Subject to Section 10, the Onshore Collateral Agent hereby undertakes to
     execute and deliver any and all documents and public deed that may be
     required to formalize such release at the cost of the Borrower.

12.  PROCEEDS OF THE FORECLOSURE OF THE GUARANTY

12.1 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(a), the proceeds of such foreclosure shall be allocated by the
     Onshore Collateral Agent in accordance with the order of priority and terms
     set forth in Section 4.18 of the Master Security Agreement. Once the
     Secured Obligations have been paid or prepaid in full, any balance of the
     proceeds of the sale of the Guaranty shall be paid and delivered to the
     Borrower.

12.2 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.02(b), the proceeds of such foreclosure shall be allocated in
     accordance with the applicable rules under the Code of Civil Procedure and
     in accordance with the order of priority and terms set forth in Section
     4.18 of the Master Security Agreement. Once the Secured Obligations have
     been paid or prepaid in full, any balance of the proceeds of the sale of
     the Guaranty shall be paid and delivered to the Borrower.

13.  NOTICES

     Any notice, request, demand, consent, designation, direction, instruction,
     certificate and other required communications to be given hereunder between
     the Parties shall be in writing and shall be addressed, respectively, as
     follows, or to such other address as may be hereafter furnished for this
     purpose by such Party:


                                                                               9

     If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager
          Facsimile: (51-54) 283-376

          with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          United States of America
          Attention: ______________
          Facsimile: ______________

     If to the Onshore Collateral Agent, at:

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040

14.  GOVERNING LAW AND JURISDICTION

14.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

14.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, enforcement
     or interpretation of this Agreement shall be resolved before the judges of
     the judicial district of Arequipa - Cercado; provided that the Parties
     agree that any disputes arising out of or in connection with the terms of
     the Master Security Agreement shall not be resolved as set forth in this
     Section 14.2 but will be resolved pursuant to the terms of the Master
     Security Agreement.


                                                                              10

15.  SEVERABILITY

     If any provision of this Agreement is or becomes invalid, illegal or
     unenforceable, it shall, to the extent possible, be modified in such manner
     as to be valid, legal and enforceable but so as most nearly to retain the
     intent of the Parties. If such modification is not possible, such provision
     shall be severed from this Agreement. In either case the validity, legality
     and enforceability of the remaining provisions of this Agreement shall not
     in any way be affected or impaired thereby.

16.  AMENDMENTS

Neither this Agreement nor any terms hereof may be amended, supplemented or
modified other than pursuant to a written instrument executed by (i) the
Borrower and (ii) the Onshore Collateral Agent.

Mr. Notary, please add the pertinent introduction and conclusion as required by
law and forward the corresponding notices to the Public Registry for the
recording of this Agreement.

                                                                  Lima, __, 2005

SOCIEDAD MINERA CERRO VERDE S.A.A.


- ------------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- ------------------------------
By:
Title:


                                                                              11

                                    EXHIBIT 1

                         LIST OF CORE MINING CONCESSIONS


                                                                              12

                                    EXHIBIT 2

                         LIST OF PRE-APPROVED APPRAISERS

Name:      Apoyo Consultoria
Address:   Calle Gonzales Larranaga 265
           San Antonio, Lima 18
           Peru
Phone:     (51-1) 213-1100
Fax:       (51-1) 241-4032

Name:      Macroconsult
Address:   Calle General Borgono 1156
           Lima 18
           Peru
Phone:     (51-1) 221-2695
Fax:       (51-1) 221-2696

Name:      Interinvest
Address:   Av. Carlos Villaran 140
           Torre A, 18th floor
           Lima 13
           Peru
Phone:     (51-1) 219-2200
Fax:       (51-1) 219-2220

Name:      Enfoca - Gestion Empresarial
Address:   Los Pinos 222
           Lima 27
           Peru
Phone:     (51-1) 222-0808
Fax:       _______________

Name:      Alonso y Asociados
Address:   Av. Republica de Panama 3030
           Of. 701
           Lima 27
           Peru
Phone:     (51-1) 463-1818 and (51-1) 463-5616
Fax:       _______________


                                                                              13

                             EXHIBIT D - Form of cesion condicionada de derechos
                                                   for Domestic Sales Agreements

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for the CONDITIONAL ASSIGNMENT
OF RIGHTS AGREEMENT (this "Agreement") entered into by and between:

(1)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _____, identified with _____, as per power of attorney
     registered in Entry Card _____ of File No. _____ of the Public Registry of
     Companies for Lima (the "Borrower"); and

(2)  CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
     Peru, with Taxpayer Registry No. _____, duly represented by _____,
     identified with _____, as per the power of attorney registered in Entry
     Card _____ of File No. _____ of the Public Registry of Companies for Lima
     (together with its successors and assigns, the "Onshore Collateral Agent").

Borrower and Onshore Collateral Agent are referred collectively herein as the
"Parties" and individually as a "Party".

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities for the operation of the Cerro
     Verde copper mine, including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru.

1.2  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project"), for which purposes the Borrower intends to obtain
     financing in an approximate amount of Four Hundred and Fifty Million
     Dollars of the United States of America (US$ 450,000,000.00).

1.3  The Borrower has entered into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.4  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the


                                                                               1

     Borrower undertaken by each of these financial institutions in accordance
     with the Master Participation Agreement.

1.5  The Borrower intends to issue the Peruvian Bonds in the Peruvian market
     through a bond program in order to complete the financing that it requires
     for the development of the Sulfide Project.

1.6  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent in order to
     set forth, among other things, the terms of the security interests to be
     granted by the Borrower in favor of the Onshore Collateral Agent, who acts
     for the benefit and on behalf of the Secured Parties, to secure the timely
     and full payment or prepayment of the Secured Obligations. The Senior
     Lenders have appointed Citibank del Peru S.A. as Onshore Collateral Agent
     in the Master Security Agreement. The intent of the parties to the Master
     Security Agreement is that, prior to the first issuance of the Peruvian
     Bonds, the Common Representative will enter into a New Party Accession
     Agreement and thereupon the Peruvian Bondholders acting through the Common
     Representative will, collectively, have all of the rights and obligations
     of a Senior Lender under the Master Security Agreement, including, without
     limitation, the right of the Common Representative, on behalf of the
     Peruvian Bondholders, to benefit as a Senior Lender from the security to be
     granted by the Borrower to the Secured Parties pursuant to the Master
     Security Agreement and the other Security Documents, including, without
     limitation, the conditional assignment of rights granted under this
     Agreement.

1.7  Pursuant to the Master Security Agreement, the Borrower has agreed to
     conditionally assign all of its rights under the Domestic Sales Agreements
     in favor of the Onshore Collateral Agent for the benefit and on behalf of
     the Secured Parties, as security for the Borrower's full payment or
     prepayment of the Secured Obligations, on the terms and conditions set
     forth herein.

1.8  The Borrower and the Onshore Collateral Agent have entered into this
     Agreement for the purpose of materializing the commitments assumed by the
     Borrower as described in Section 1.7.

2.   INTERPRETATION

2.1  The Exhibits hereto form part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibits hereto.


                                                                               2

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference.

3.   PURPOSE

3.1. Pursuant to the terms and conditions of this Agreement, the Borrower hereby
     conditionally assigns in favor of the Onshore Collateral Agent, for the
     benefit and on behalf of the Secured Parties, as security for the
     Borrower's full payment or prepayment of the Secured Obligations, all of
     the Borrower's credit rights in all Domestic Sales Agreements that exist as
     of the date hereof, if any, and that the Borrower may enter into following
     the date hereof, which credit rights consist of the Borrower's rights to
     receive any current and future payments, whether determined or to be
     determined, pursuant to any and all Domestic Sales Agreements, including,
     but not limited to, price, interest, fees, penalties, compensations,
     indemnities and any other monetary amounts.

3.2. The Borrower shall remain liable to perform all its obligations pursuant to
     and with respect to each Domestic Sales Agreement, and the Onshore
     Collateral Agent shall not be under any obligation in respect thereof or be
     under any liability in the event of a failure by the Borrower to perform
     its obligations in respect thereof.

3.3  The Parties acknowledge and declare that the conditional assignment of
     rights granted hereunder has the purpose of serving as security for the
     Secured Obligations, and shall not be considered as a payment by the
     Borrower of the Secured Obligations.

4.   EFFECTIVENESS OF THE ASSIGNMENT

4.1  With respect to any Domestic Sales Agreement that (i) has a term of three
     (3) years or more and (ii) contemplates annual sales of at least 50,000 dry
     short tons of Cathodes or Concentrate (each, a "Notice Sales Agreement"),
     concurrently with or within three (3) Peruvian Business Days of entering
     into any such Notice Sales Agreement, the Borrower shall provide or cause
     to be provided notice to the applicable Buyer either (A) through the
     delivery of a written notice of conditional assignment substantially in the
     form attached hereto as Exhibit 1 (the "Notice of Conditional Assignment")
     through notarial notification, which Notice of Conditional Assignment shall
     instruct the applicable Buyer to pay all Proceeds from such Domestic Sales
     directly into the Onshore Dollars Account and shall expressly indicate that
     such assignment shall become effective with respect to such Buyer upon the
     delivery of a notice of effectiveness by the Onshore Collateral Agent to
     such Buyer substantially in the form attached hereto as Exhibit 2 (the
     "Notice of Effectiveness"), or (B) through an acknowledgment and consent
     substantially in the


                                                                               3

     form attached hereto as Exhibit 3 (the "Domestic Buyer's Acknowledgement")
     to the effect that such Buyer has received notice from the Borrower of the
     conditional assignment of the Notice Sales Agreement that such Buyer will
     pay all Proceeds from such Domestic Sales directly into the Onshore Dollars
     Account and that such assignment shall become effective with respect to
     such Buyer upon the delivery of a notice of effectiveness by the Onshore
     Collateral Agent to such Buyer substantially in the form attached as Annex
     A to Exhibit 3 hereto. The Borrower shall deliver to the Onshore Collateral
     Agent a copy certified by a notary public of each Notice of Conditional
     Assignment or Domestic Buyer's Acknowledgement, as the case may be, within
     three (3) Peruvian Business Days following its delivery.

4.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take a Borrower Enforcement Direction with respect
     to the assignment of rights granted under this Agreement pursuant to the
     terms of the Master Security Agreement, the Onshore Collateral Agent shall
     proceed to deliver the relevant Notices of Effectiveness through notarial
     notification, in each case with copy to the Borrower. The assignment of
     rights granted under this Agreement shall become effective vis-a-vis each
     applicable Buyer upon the delivery thereto of the relevant Notice of
     Effectiveness.

4.3  The Borrower shall immediately inform the Onshore Collateral Agent of any
     change of address that may have been communicated thereto by any Buyer.

4.4  Because the conditional assignment of rights granted under this Agreement
     shall become effective vis-a-vis each applicable Buyer only upon the
     delivery thereto of the relevant Notice of Effectiveness, notwithstanding
     the instructions provided by the Borrower to, or acknowledged by, the
     applicable Buyers under Notice Sales Agreements as set forth herein to
     cause all Proceeds from Domestic Sales to be made directly into the Onshore
     Dollars Account, the Borrower shall continue to be considered the title
     holder of the rights conditionally assigned hereunder until the delivery to
     the Borrower of copy of the Notice of Effectiveness and shall be fully
     entitled to exercise such rights without limitation until the occurrence of
     such delivery.

5.   TERMS AND CONDITIONS OF THE ASSIGNMENT

5.1  Except as set forth in Section 8, the conditional assignment of rights
     granted hereunder shall terminate on the earlier of (i) the Borrower's full
     payment or prepayment of the Secured Obligations or (ii) so long as the
     Senior Facility Loans Obligations have been paid or prepaid in full, the
     Borrower, with the consent of the Onshore Collateral Agent, seeks to
     terminate this Agreement as contemplated under Section 7.03 of the Peruvian
     Bonds Indenture, and either such termination shall be effected by means of
     a joint written notification to be sent by the Borrower and the Onshore
     Collateral Agent to the applicable Buyers so indicating. The Onshore


                                                                               4

     Collateral Agent undertakes to make such notification acting as instructed
     by the Administrative Agent pursuant to Section 9.03 of the Master Security
     Agreement and immediately upon the request of the Borrower.

5.2  According to Article 1211 of Civil Code, upon its effectiveness, the
     assignment of the Borrower's rights shall include the transmission to the
     Onshore Collateral Agent of all of the privileges, guaranties and accessory
     rights that may exist in relation to the assigned rights.

5.3  Neither the conditional assignment of rights granted hereunder nor, upon
     its effectiveness, the assignment of the Borrower's rights shall be
     understood as an assignment of Borrower's contractual position in the
     Domestic Sales Agreements, and thus the Onshore Collateral Agent does not
     assume any obligation thereunder.

6.   OBLIGATION OF THE BORROWER

Notwithstanding all other obligations set forth in this Agreement, the Borrower
hereby undertakes to enter into any agreement and deliver any notice reasonably
necessary to effect the conditional assignment of the rights granted hereunder
and, upon its effectiveness, the assignment thereof with all its privileges,
warranties and accessory rights, provided that the Borrower shall not be
required to enter into any such agreement or deliver any such notice, including,
without limitation, a Notice of Conditional Assignment or any other notice to
any Buyer with respect to Domestic Sales Agreements that are not Notice Sales
Agreements.

7.   REPRESENTATIONS AND WARRANTIES OF THE BORROWER

7.1  As the date hereof, the Borrower makes the following representations and
     warranties to the Onshore Collateral Agent:

     (a)  The Borrower is and will be the only title holder of the conditionally
          assigned rights and is and will be entitled to assign such rights, and
          therefore it has the full right, power and authority to enter into
          this Agreement without violating any contractual, legal, or other
          obligation to any entity or person; and

     (b)  The conditionally assigned rights are not subject to any prior lien or
          encumbrance that could limit its ability to assign such rights in
          favor of the Onshore Collateral Agent.


                                                                               5

8.   OBLIGATION OF THE ONSHORE COLLATERAL AGENT

The Onshore Collateral Agent hereby covenants and agrees to promptly release the
conditional assignment granted under this Agreement over all of the Borrower's
rights under all Domestic Sales Agreements, and to take all actions necessary to
formalize such release, in the event that (i) prior to the occurrence of the
Closing Date and prior to the issuance of any Peruvian Bonds, the Borrower
terminates and reduces all Commitments to zero, or (ii) the conditional
assignment of rights granted hereunder has terminated as provided in Section
5.1.

9.   NOTICES

Any notice, request, demand, consent, designation, direction, instruction,
certificate and other required communications to be given hereunder between the
Parties shall be in writing and be addressed, respectively, as follows, or to
such other address as may be hereafter furnished for this purpose by such Party:

     If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager

          Facsimile: (51-54) 283-376with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          United States of America
          Attention: ______________
          Facsimile: ______________


                                                                               6

     If to the Onshore Collateral Agent, at:

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040

10.  GOVERNING LAW AND JURISDICTION

10.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

10.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, execution or
     interpretation of this Agreement shall be resolved before the judges of the
     judicial district of Lima-Cercado; provided that the Borrower and the
     Onshore Collateral Agent agree that any disputes arising out of or in
     connection with the terms of the Master Security Agreement shall not be
     resolved as set forth in this Section 10.2 but shall be resolved pursuant
     to the terms of the Master Security Agreement.

11.  ASSIGNMENT OF THE RIGHTS UNDER THIS AGREEMENT

The Borrower hereby expressly grants its prior written consent, in accordance
with Article 1435 of the Civil Code, to the assignment of this Agreement
("cesion de posicion contractual") by the Onshore Collateral Agent to any
successor or assign of the Onshore Collateral Agent appointed by the Senior
Lenders pursuant to the Master Security Agreement.

12.  SEVERABILITY

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal, enforceable but so as most nearly to retain the intent of
the Parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.


                                                                               7

13.  AMENDMENTS

Neither this Agreement nor any terms hereof may be amended, supplemented or
modified other than pursuant to a written instrument executed by (i) the
Borrower and (ii) the Onshore Collateral Agent.

Mr. Notary, please add the pertinent introduction and conclusion as required by
law.

                                                               Lima, _____, 2005

SOCIEDAD MINERA CERRO VERDE S.A.A.


- ------------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- ------------------------------
By:
Title:


                                                                               8

                             EXHIBIT D - Form of cesion condicionada de derechos
                                                   for Domestic Sales Agreements

                                    Exhibit 1

                        Notice of Conditional Assignment

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of Buyer]
[Address of Buyer]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to the [name of Domestic Sales Agreement] (the "Agreement"),
dated _____, entered into by and between Sociedad Minera Cerro Verde S.A.A. as
seller (the "Seller") and [name of Buyer] as buyer (the "Buyer" or "you").

Pursuant to Article 1215 of the Civil Code, the Seller hereby gives you notice
that it has conditionally assigned in favor of [name of Onshore Collateral
Agent] (together with its successors and assigns, the "Assignee"), for the
benefit and on behalf of certain senior lenders of the Seller, all of its credit
rights under the Agreement, which credit rights consist of the Seller's rights
to receive any current and future payments, whether determined or to be
determined, pursuant to the Agreement, including, but not limited to, price,
interest, fees, penalties, compensations, indemnities and any other amount of
money (collectively, the "Assigned Rights"). Such conditional assignment to the
Assignee of the Assigned Rights shall become effective with respect to you upon
your receipt of a notice of effectiveness from the Assignee, without the
participation of the Seller, substantially in the form attached hereto as Annex
A (the "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment of the Assigned Rights to the Assignee shall be in full force and
effect vis-a-vis you.

You are hereby irrevocably instructed that, immediately upon your receipt hereof
and at all times thereafter, all payments made by you to the Seller pursuant to
the Agreement shall be made directly into account [number of Onshore Dollars
Account] opened in the name of the Seller at [name of Depository Bank] or into
such other account as designated by the Assignee and informed to you in writing
on or after the date of delivery to you of the Notice of Effectiveness.


                                                                               9

Pursuant to Article 1211 of the Civil Code, upon your receipt of the Notice of
Effectiveness, the assignment of the Assigned Rights shall include the
transmission to the Assignee of all of the privileges, guaranties and accessory
rights that may exist in relation to such Assigned Rights.

Sincerely yours,

SOCIEDAD MINERA CERRO VERDE S.A.A.


- ------------------------------
By:
Title:


                                                                              10

                                     Annex A

                           Notice of Effectiveness(1)

- ----------
(1)  Insert Notice of Effectiveness attached as Exhibit 2.


                                                                              11

                                    Exhibit 2

                             Notice of Effectiveness

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of Buyer]
[Address of Buyer]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the [name of Domestic Sales Agreement] (the
"Agreement"), dated ________, entered into by and between Sociedad Minera Cerro
Verde S.A.A. as seller (the "Seller") and [name of Buyer] as buyer (the "Buyer"
or "you"), and (ii) the Seller's notarial letter (the "Notice of Conditional
Assignment"), dated ________ and received by you on ________, whereby the Seller
gave you notice pursuant to Article 1215 of the Civil Code that it had
conditionally assigned in favor of the undersigned (together with its successors
and assigns, the "Assignee"), for the benefit and on behalf of certain senior
lenders of the Seller, all of its credit rights under the Agreement, which
consist of the Seller's rights to receive any current and future payments,
whether determined or to be determined, pursuant to the Agreement, including,
but not limited to, price, interest, fees, penalties, compensations, indemnities
and any other amount of money (the "Assigned Rights").

As stated by the Seller in the Notice of Conditional Assignment, such
conditional assignment of the Assigned Rights to the Assignee shall become
effective with respect to you upon your receipt of this notice (this "Notice of
Effectiveness"), whereupon and thereafter the indicated assignment of the
Assigned Rights to the Assignee shall be in full force and effect vis-a-vis you.
In addition, as stated by the Seller in the Notice of Conditional Assignment,
this Notice of Effectiveness is being sent to you without the participation of
the Seller.

Therefore, upon your receipt of this Notice of Effectiveness all of the Assigned
Rights shall be deemed assigned to the Assignee, for the benefit and on behalf
of certain senior lenders of the Seller, whereupon and thereafter the indicated
assignment of Assigned Rights to the Assignee shall be in full force and effect
vis-a-vis you.


                                                                              12

Pursuant to the Seller's irrevocable instruction to you in the Notice of
Conditional Assignment, all payments made by you to the Seller pursuant to the
Agreement shall [continue to be made directly into account [number of Onshore
Dollars Account] opened in the name of the Seller at [name of Depository Bank]
until the undersigned instructs you otherwise in writing] / [be made directly
into account [number] opened in the name of ________ at [name of bank] beginning
on the date of your receipt hereof].

According to Article 1211 of the Civil Code, upon your receipt of this notice,
the assignment of the Assigned Rights shall include the transmission to the
Assignee of all of the privileges, guaranties and accessory rights that may
exist in relation to such Assigned Rights.

Sincerely yours,

[NAME OF ONSHORE COLLATERAL AGENT]


- ------------------------------
By:
Title:


                                                                              13

                                    Exhibit 3

                        Domestic Buyer's Acknowledgement

                                 Notarial Letter

Lima, [date]

Messrs.
Sociedad Minera Cerro Verde S.A.A.
Asiento Minero Cerro Verde S/N
Uchumayo - Arequipa
Peru

Attention: General Manager

Ladies and gentlemen:

Reference is made to the [name of Domestic Sales Agreement] (the "Agreement"),
dated _______, entered into by and between Sociedad Minera Cerro Verde S.A.A. as
seller (the "Seller" or "you") and the undersigned as buyer (the "Buyer" or
"we").

We hereby acknowledge, for purposes of Article 1215 of the Civil Code, that you
have conditionally assigned in favor of [name of Onshore Collateral Agent]
(together with its successors and assigns, the "Assignee"), for the benefit and
on behalf of certain senior lenders of the Seller, all of your credit rights
under the Agreement, which credit rights consist of your rights to receive any
current and future payments, whether determined or to be determined, pursuant to
the Agreement, including, but not limited to, price, interest, fees, penalties,
compensations, indemnities and any other amount of money (the "Assigned
Rights"). We also acknowledge that such conditional assignment of the Assigned
Rights to the Assignee shall become effective with respect to the undersigned
upon our receipt of a notice of effectiveness from the Assignee, without the
participation of the Seller, substantially in the form attached hereto as Annex
A (the "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment of the Assigned Rights to the Assignee shall be in full force and
effect vis-a-vis the undersigned.

We further acknowledge that we have been irrevocably instructed by you that
immediately upon the date hereof and at all times thereafter until instructed
otherwise by the Assignee in writing after delivery of the Notice of
Effectiveness, all payments made by the undersigned to you pursuant to the
Agreement shall be made directly into account [number of Onshore Dollars
Account] opened in your name at [name of Depository Bank].


                                                                              14

We further acknowledge that, pursuant to Article 1211 of the Civil Code, upon
our receipt of the Notice of Effectiveness, the assignment of the Assigned
Rights shall include the transmission to the Assignee of all of the privileges,
guaranties and accessory rights that may exist in relation to such Assigned
Rights.

We hereby provide our express consent to the assignment of the Assigned Rights
and, upon receipt by the undersigned of the Notice of Effectiveness, to continue
to make all payments pursuant to the Agreement directly into account [number of
Onshore Dollars Account] opened in the name of the Seller at [name of Depository
Bank] until you instruct us otherwise in writing.

The Assignee may rely on our acknowledgements and consent herein.

Sincerely yours,

[NAME OF BUYER]


- ------------------------------
By:
Title:


                                                                              15

                                     Annex A

                             Notice of Effectiveness

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of Buyer]
[Address of Buyer]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the [name of Domestic Sales Agreement] (the
"Agreement"), dated ________, entered into by and between Sociedad Minera Cerro
Verde S.A.A. as seller (the "Seller") and [name of Buyer] as buyer (the "Buyer"
or "you"), and (ii) your letter to the Seller (the "Acknowledgement Notice"),
dated ________, whereby, among other things, you acknowledged and consented, for
purposes of Article 1215 of the Civil Code, that the Seller had conditionally
assigned in favor of the undersigned (together with its successors and assigns,
the "Assignee"), for the benefit and on behalf of certain senior lenders of the
Seller, all of its credit rights under the Agreement, which credit rights
consist of the Seller's rights to receive any current and future payments,
whether determined or to be determined, pursuant to the Agreement, including,
but not limited to, price, interest, fees, penalties, compensations, indemnities
and any other amount of money (the "Assigned Rights").

As you acknowledged and consented in the Acknowledgement Notice, such
conditional assignment of the Assigned Rights to the Assignee shall become
effective with respect to you upon your receipt of this notice (this "Notice of
Effectiveness"), whereupon and thereafter the indicated assignment of the
Assigned Rights to the Assignee shall be in full force and effect vis-a-vis you.
As also acknowledged and consented by you in the Acknowledgement Notice, this
Notice of Effectiveness is being sent to you without the participation of the
Seller.

Therefore, upon your receipt of this Notice of Effectiveness, all of the
Assigned Rights shall be deemed assigned to the Assignee, for the benefit and on
behalf of certain senior lenders of the Seller, whereupon and thereafter the
indicated assignment of Assigned Rights to the Assignee shall be in full force
and effect vis-a-vis you.

Pursuant to the Acknowledgement Notice, you have acknowledged your receipt of
the Seller's irrevocable instruction that all payments made by you to the Seller
pursuant to the Agreement

shall continue to be made directly into account [number of Onshore Dollars
Account] opened in the name of the Seller at [name of Depository Bank] until the
undersigned instructs you otherwise in writing.

Pursuant to Article 1211 of the Civil Code, upon your receipt of this Notice of
Effectiveness, the assignment of the Assigned Rights shall include the
transmission to the Assignee of all of the privileges, guaranties and accessory
rights that may exist in relation to such Assigned Rights.

Sincerely yours,

[NAME OF ONSHORE COLLATERAL AGENT]


- ------------------------------
By:
Title:


                                                                               2

                                                                     EXHIBIT E-1

                        Notice of Conditional Assignment

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of Buyer]
[Address of Buyer]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to the [name of Domestic Sales Agreement] (the "Agreement"),
dated _______, entered into by and between Sociedad Minera Cerro Verde S.A.A. as
seller (the "Seller") and [name of Buyer] as buyer (the "Buyer" or "you").

Pursuant to Article 1215 of the Civil Code, the Seller hereby gives you notice
that it has conditionally assigned in favor of [name of Onshore Collateral
Agent] (together with its successors and assigns, the "Assignee"), for the
benefit and on behalf of certain senior lenders of the Seller, all of its credit
rights under the Agreement, which credit rights consist of the Seller's rights
to receive any current and future payments, whether determined or to be
determined, pursuant to the Agreement, including, but not limited to, price,
interest, fees, penalties, compensations, indemnities and any other amount of
money (collectively, the "Assigned Rights"). Such conditional assignment to the
Assignee of the Assigned Rights shall become effective with respect to you upon
your receipt of a notice of effectiveness from the Assignee, without the
participation of the Seller, substantially in the form attached hereto as Annex
A (the "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment of the Assigned Rights to the Assignee shall be in full force and
effect vis-a-vis you.

You are hereby irrevocably instructed that, immediately upon your receipt hereof
and at all times thereafter, all payments made by you to the Seller pursuant to
the Agreement shall be made directly into account [number of Onshore Dollars
Account] opened in the name of the Seller at [name of Depository Bank] or into
such other account as designated by the Assignee and informed to you in writing
on or after the date of delivery to you of the Notice of Effectiveness.

Pursuant to Article 1211 of the Civil Code, upon your receipt of the Notice of
Effectiveness, the assignment of the Assigned Rights shall include the
transmission to the Assignee of all of the privileges, guaranties and accessory
rights that may exist in relation to such Assigned Rights.

Sincerely yours,

SOCIEDAD MINERA CERRO VERDE S.A.A.


- ------------------------------
By:
Title:


                                                                               2

                                     ANNEX A

                             Notice of Effectiveness

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of Buyer]
[Address of Buyer]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the [name of Domestic Sales Agreement] (the
"Agreement"), dated ________, entered into by and between Sociedad Minera Cerro
Verde S.A.A. as seller (the "Seller") and [name of Buyer] as buyer (the "Buyer"
or "you"), and (ii) the Seller's notarial letter (the "Notice of Conditional
Assignment"), dated ________ and received by you on ________, whereby the Seller
gave you notice pursuant to Article 1215 of the Civil Code that it had
conditionally assigned in favor of the undersigned (together with its successors
and assigns, the "Assignee"), for the benefit and on behalf of certain senior
lenders of the Seller, all of its credit rights under the Agreement, which
consist of the Seller's rights to receive any current and future payments,
whether determined or to be determined, pursuant to the Agreement, including,
but not limited to, price, interest, fees, penalties, compensations, indemnities
and any other amount of money (the "Assigned Rights").

As stated by the Seller in the Notice of Conditional Assignment, such
conditional assignment of the Assigned Rights to the Assignee shall become
effective with respect to you upon your receipt of this notice (this "Notice of
Effectiveness"), whereupon and thereafter the indicated assignment of the
Assigned Rights to the Assignee shall be in full force and effect vis-a-vis you.
In addition, as stated by the Seller in the Notice of Conditional Assignment,
this Notice of Effectiveness is being sent to you without the participation of
the Seller.

Therefore, upon your receipt of this Notice of Effectiveness all of the Assigned
Rights shall be deemed assigned to the Assignee, for the benefit and on behalf
of certain senior lenders of the Seller, whereupon and thereafter the indicated
assignment of Assigned Rights to the Assignee shall be in full force and effect
vis-a-vis you.

Pursuant to the Seller's irrevocable instruction to you in the Notice of
Conditional Assignment, all payments made by you to the Seller pursuant to the
Agreement shall [continue to be made directly into account [number of Onshore
Dollars Account] opened in the name of the Seller at [name of Depository Bank]
until the undersigned instructs you otherwise in writing] / [be made directly
into account [number] opened in the name of ________ at [name of bank] beginning
on the date of your receipt hereof].

According to Article 1211 of the Civil Code, upon your receipt of this notice,
the assignment of the Assigned Rights shall include the transmission to the
Assignee of all of the privileges, guaranties and accessory rights that may
exist in relation to such Assigned Rights.

Sincerely yours,

[NAME OF ONSHORE COLLATERAL AGENT]


- ------------------------------
By:
Title:


                                                                               2

                                                                     EXHIBIT E-2

                        Domestic Buyer's Acknowledgement

                                 Notarial Letter

Lima, [date]

Messrs.
Sociedad Minera Cerro Verde S.A.A.
Asiento Minero Cerro Verde S/N
Uchumayo - Arequipa
Peru

Attention: General Manager

Ladies and gentlemen:

Reference is made to the [name of Domestic Sales Agreement] (the "Agreement"),
dated ________, entered into by and between Sociedad Minera Cerro Verde S.A.A.
as seller (the "Seller" or "you") and the undersigned as buyer (the "Buyer" or
"we").

We hereby acknowledge, for purposes of Article 1215 of the Civil Code, that you
have conditionally assigned in favor of [name of Onshore Collateral Agent]
(together with its successors and assigns, the "Assignee"), for the benefit and
on behalf of certain senior lenders of the Seller, all of your credit rights
under the Agreement, which credit rights consist of your rights to receive any
current and future payments, whether determined or to be determined, pursuant to
the Agreement, including, but not limited to, price, interest, fees, penalties,
compensations, indemnities and any other amount of money (the "Assigned
Rights"). We also acknowledge that such conditional assignment of the Assigned
Rights to the Assignee shall become effective with respect to the undersigned
upon our receipt of a notice of effectiveness from the Assignee, without the
participation of the Seller, substantially in the form attached hereto as Annex
A (the "Notice of Effectiveness"), whereupon and thereafter the indicated
assignment of the Assigned Rights to the Assignee shall be in full force and
effect vis-a-vis the undersigned.

We further acknowledge that we have been irrevocably instructed by you that
immediately upon the date hereof and at all times thereafter until instructed
otherwise by the Assignee in writing after delivery of the Notice of
Effectiveness, all payments made by the undersigned to you pursuant to the
Agreement shall be made directly into account [number of Onshore Dollars
Account] opened in your name at [name of Depository Bank].

We further acknowledge that, pursuant to Article 1211 of the Civil Code, upon
our receipt of the Notice of Effectiveness, the assignment of the Assigned
Rights shall include the transmission to the Assignee of all of the privileges,
guaranties and accessory rights that may exist in relation to such Assigned
Rights.

We hereby provide our express consent to the assignment of the Assigned Rights
and, upon receipt by the undersigned of the Notice of Effectiveness, to continue
to make all payments pursuant to the Agreement directly into account [number of
Onshore Dollars Account] opened in the name of the Seller at [name of Depository
Bank] until you instruct us otherwise in writing.

The Assignee may rely on our acknowledgements and consent herein.

Sincerely yours,

[NAME OF BUYER]


- ------------------------------
By:
Title:

                                     ANNEX A

                             NOTICE OF EFFECTIVENESS

                                 Notarial Letter

Lima, [date]

Messrs.
[Name of Buyer]
[Address of Buyer]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the [name of Domestic Sales Agreement] (the
"Agreement"), dated ________, entered into by and between Sociedad Minera Cerro
Verde S.A.A. as seller (the "Seller") and [name of Buyer] as buyer (the "Buyer"
or "you"), and (ii) your letter to the Seller (the "Acknowledgement Notice"),
dated ________, whereby, among other things, you acknowledged and consented, for
purposes of Article 1215 of the Civil Code, that the Seller had conditionally
assigned in favor of the undersigned (together with its successors and assigns,
the "Assignee"), for the benefit and on behalf of certain senior lenders of the
Seller, all of its credit rights under the Agreement, which credit rights
consist of the Seller's rights to receive any current and future payments,
whether determined or to be determined, pursuant to the Agreement, including,
but not limited to, price, interest, fees, penalties, compensations, indemnities
and any other amount of money (the "Assigned Rights").

As you acknowledged and consented in the Acknowledgement Notice, such
conditional assignment of the Assigned Rights to the Assignee shall become
effective with respect to you upon your receipt of this notice (this "Notice of
Effectiveness"), whereupon and thereafter the indicated assignment of the
Assigned Rights to the Assignee shall be in full force and effect vis-a-vis you.
As also acknowledged and consented by you in the Acknowledgement Notice, this
Notice of Effectiveness is being sent to you without the participation of the
Seller.

Therefore, upon your receipt of this Notice of Effectiveness, all of the
Assigned Rights shall be deemed assigned to the Assignee, for the benefit and on
behalf of certain senior lenders of the

Seller, whereupon and thereafter the indicated assignment of Assigned Rights to
the Assignee shall be in full force and effect vis-a-vis you.

Pursuant to the Acknowledgement Notice, you have acknowledged your receipt of
the Seller's irrevocable instruction that all payments made by you to the Seller
pursuant to the Agreement shall continue to be made directly into account
[number of Onshore Dollars Account] opened in the name of the Seller at [name of
Depository Bank] until the undersigned instructs you otherwise in writing.

Pursuant to Article 1211 of the Civil Code, upon your receipt of this Notice of
Effectiveness, the assignment of the Assigned Rights shall include the
transmission to the Assignee of all of the privileges, guaranties and accessory
rights that may exist in relation to such Assigned Rights.

Sincerely yours,

[NAME OF ONSHORE COLLATERAL AGENT]


- ------------------------------
By:
Title:

                                                                     EXHIBIT E-3

                          Non-Domestic Buyer's Consent

[date]

Sociedad Minera Cerro Verde S.A.A.
Asiento Minero Cerro Verde S/N
Uchumayo - Arequipa
Peru
Attention: General Manager

Ladies and gentlemen:

Reference is made to the [name of Non-Domestic Sales Agreement] (the
"Agreement"), dated [____], entered into by and between Sociedad Minera Cerro
Verde S.A.A. as seller (the "Seller" or "you") and the undersigned as buyer (the
"Buyer" or "we").

We hereby acknowledge, that you have conditionally assigned in favor of [name of
Offshore Collateral Agent] (together with its successors and assigns, the
"Assignee"), for the benefit and on behalf of certain senior lenders of the
Seller, all of your credit rights under the Agreement, which credit rights
consist of your rights to receive any current and future payments, whether
determined or to be determined, pursuant to the Agreement, including, but not
limited to, price, interest, fees, penalties, compensations, indemnities and any
other amount of money.

We further acknowledge that we have been irrevocably instructed by you that
immediately upon the date hereof and at all times thereafter, all payments made
by the undersigned to you pursuant to the Agreement shall be made directly into
account [number of Offshore Account] opened in your name at [name of Depository
Bank].

The Assignee may rely on our acknowledgements herein.

Sincerely yours,

[NAME OF BUYER]


- -----------------------------
By:
Title:

                                   EXHIBIT F - Form of Contrato de Cuenta Escrow
                                                            for Onshore Accounts

                          ESCROW ACCOUNTS AGREEMENT(1)

     This Escrow Accounts Agreement (this "Agreement"), dated as of _______,
2005, is entered into by and among:

(1)  BANCO DE CREDITO DEL PERU, a bank incorporated and existing under the laws
     of Peru, with Taxpayer Registry No. _______, duly represented by _______,
     identified with ________ No. _______, as per power of attorney registered
     in Entry Card _______ of File No. 11009127 of the Public Registry of
     Companies for Lima (the "Escrow Agent");

(2)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _______, identified with _______ No. ________, as per power
     of attorney registered in Entry Card _______ of File No. ________ of the
     Public Registry of Companies for Lima (the "Borrower"); and

(3)  CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
     Peru, with Taxpayer Registry No. ________, duly represented by _________,
     identified with ________ No. ________, as per power of attorney registered
     in Entry Card _________ of File No. _________ of the Public Registry of
     Companies for Lima (together with its successors and assigns, the "Onshore
     Collateral Agent").

                                   WITNESSETH:

     WHEREAS, in accordance with the Ley General del Sistema Financiero y del
Sistema de Seguros y Organica de la Superintendencia de Banca y Seguros, Law No.
26702 (the "Banking Law"), the Escrow Agent is authorized to enter into all
operations permitted to banking institutions by the Banking Law, including those
contemplated by this Agreement;

     WHEREAS, the Borrower owns the Cerro Verde copper mine, including a copper
leaching and solution extraction/electrowinning (SX/EW) operation, located in
the Districts of Uchumayo and Yarabamba, Province of Arequipa, Peru;

     WHEREAS, the board of directors of the Borrower has approved the
development of a primary sulfide ore body beneath the oxide ore body currently
in production (the "Sulfide Project"), for which purposes the Borrower intends
to obtain financing in an approximate amount of Four Hundred and Fifty Million
Dollars of the United States of America (US$ 450,000,000.00);

     WHEREAS, the Borrower has entered into a Master Participation Agreement
among the Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the
Global Coordinators, the Lead Arrangers and the Administrative Agent in order to
set forth the general financing arrangement for the Sulfide Project;

- ----------
(1) A similar agreement will be entered into with Citibank del Peru S.A., as
Escrow Agent, with respect to the Onshore Accounts opened with Citibank del Peru
S.A.

     WHEREAS, the Borrower has entered into: (i) the JBIC Loan Agreement with
JBIC; (ii) the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
Agreement with the Commercial Banks, which establish the commitment to lend to
the Borrower undertaken by each of these financial institutions in accordance
with the Master Participation Agreement;

     WHEREAS, the Borrower intends to issue the Peruvian Bonds in the Peruvian
market through a bond program in order to complete the financing that it
requires for the development of the Sulfide Project; and

     WHEREAS, the Borrower has entered into a Master Security Agreement among
the Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee, the
Offshore Collateral Agent and the Onshore Collateral Agent to set forth, among
other things, the terms of the security interests to be granted by the Borrower
in favor of the Onshore Collateral Agent, who acts for the benefit and on behalf
of the Secured Parties, to secure the timely and full payment or prepayment of
the Secured Obligations. The Senior Lenders have appointed Citibank del Peru
S.A. as Onshore Collateral Agent in the Master Security Agreement. The intent of
the parties to the Master Security Agreement is that, prior to the first
issuance of the Peruvian Bonds, the Common Representative will enter into a New
Party Accession Agreement and thereupon the Peruvian Bondholders acting through
the Common Representative will, collectively, have all of the rights and
obligations of a Senior Lender under the Master Security Agreement, including,
without limitation, the right of the Common Representative, on behalf of the
Peruvian Bondholders, to benefit as a Senior Lender from the security to be
granted by the Borrower to the Secured Parties pursuant to the Master Security
Agreement and the other Security Documents, including, without limitation, the
rights granted under this Agreement.

     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereby agree as follows:

     1. Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, all capitalized terms used herein shall have the
meaning assigned to them in Schedule Z to the Master Security Agreement which is
incorporated herein by reference.

     2. Deposit. In accordance with the Master Security Agreement the Borrower
has opened in its name at Banco de Credito del Peru (i) an Operating Onshore
Dollars Account (account number _________) (the "Operating Onshore Dollars
Account") into which amounts shall be deposited in accordance with Section
4.12(a) of the Master Security Agreement and from which amounts shall be
withdrawn in accordance with Section 4.12(b) of the Master Security Agreement
and this Agreement, and (ii) an Operating Onshore Nuevo Soles Account (account
number __________) (the "Operating Onshore Nuevo Soles Account" and,
collectively with the Operating Onshore Dollars Account, the "Accounts") into
which amounts shall be deposited in accordance with Section 4.14(a) of the
Master Security Agreement and from which amounts shall be withdrawn in
accordance with Section 4.14(b) of the Master Security Agreement and this
Agreement. The amounts deposited from time to time and on deposit in the
Accounts, together with all interest earned thereon pursuant to this Agreement,
are hereinafter referred to as the "Escrowed Portion".


                                                                               2

          In executing this Agreement, the Escrow Agent agrees to hold and
distribute the Escrowed Portion pursuant to the terms herein indicated.

     3. Use of the Escrowed Portion. The Escrow Agent shall hold the Escrowed
Portion in escrow pending instruction from the Borrower or the Onshore
Collateral Agent, as the case may be, as provided herein and shall not dispose
of any part of the Escrowed Portion other than as provided herein.

     4. Distribution of the Escrowed Portion. The Escrow Agent shall distribute
the Escrowed Portion as follows:

          (a) Prior to receipt by the Escrow Agent of an Exclusivity Instruction
Notice (as defined below), the Escrow Agent shall withdraw, transfer, apply,
invest, reinvest or otherwise deal with the Escrowed Portion solely in
accordance with the Borrower's instructions.

          (b) Following the Escrow Agent's receipt of a written notice from the
Onshore Collateral Agent, substantially in the form attached hereto as Exhibit
1, notifying the Escrow Agent that the Escrow Agent shall only follow written
instructions from the Onshore Collateral Agent with respect to the Escrowed
Portion (an "Exclusivity Instruction Notice"), and until the Escrow Agent has
received an Exclusivity Cessation Notice (as defined below), the Escrow Agent
shall withdraw, transfer, apply, invest, reinvest or otherwise deal with the
Escrowed Portion solely in accordance with written instructions executed by the
Onshore Collateral Agent.

          (c) Following the Escrow Agent's receipt of a written notice from the
Onshore Collateral Agent, substantially in the form attached hereto as Exhibit
2, notifying the Escrow Agent that the Escrow Agent may accept instructions from
the Borrower with respect to the Escrowed Portion (an "Exclusivity Cessation
Notice"), and until the Escrow Agent has received a new Exclusivity Instruction
Notice, the Escrow Agent shall withdraw, transfer, apply, invest, reinvest or
otherwise deal with the Escrowed Portion solely in accordance with the
Borrower's instructions.

     5. Liability of the Escrow Agent. The duties and obligations of the Escrow
Agent hereunder shall be determined solely by the express provisions of this
Agreement, and the Escrow Agent shall be under no obligation to refer to any
other documents between or among the parties related in any way to this
Agreement, it being specifically understood that the following provisions are
accepted by all of the parties hereto:

          (a) The Escrow Agent shall not be liable to anyone whomsoever by
reason of any error of judgment or for any act done or step taken or omitted by
it, or for any mistake of fact or law or anything which it may do or refrain
from doing in connection herewith unless caused by or arising out of its own
gross negligence or wilful misconduct. The Borrower shall indemnify and hold the
Escrow Agent harmless from and against any and all liability and expense which
may arise out of any action taken or omitted by the Escrow Agent in accordance
with this


                                                                               3

Agreement, except such liability and expense as may result from the gross
negligence or wilful misconduct of the Escrow Agent.

          (b) The Escrow Agent shall be entitled to rely on, and shall be
protected in acting in reliance upon, any instructions or directions furnished
to it in writing executed by either the Borrower or the Onshore Collateral Agent
pursuant to this Agreement and shall be entitled to treat as genuine, and as the
document it purports to be, any letter, check, paper, instruction or other
document furnished to it by either the Borrower or the Onshore Collateral Agent
as the case may be, and believed in good faith by the Escrow Agent to be genuine
and to have been executed and presented by the proper party or parties. The
Escrow Agent shall be entitled to treat Citibank del Peru S.A. (and any
successor and assign of the Onshore Collateral Agent) as the Onshore Collateral
Agent unless and until the Escrow Agent is notified by the Borrower and the
Onshore Collateral Agent that a successor or assign of the Onshore Collateral
Agent has been designated in accordance with the Master Security Agreement.

          (c) The Escrow Agent may resign at any time by providing written
notice thereof to the other parties hereto. Such resignation shall become
effective when a successor or assign of the Escrow Agent shall have been
designated by the Borrower and the Onshore Collateral Agent and shall have
accepted such designation in writing. If no successor or assign of the Escrow
Agent shall have been so designated and shall have accepted such designation
within 30 days after the date fixed for such resignation, the Escrow Agent may
petition any court of competent jurisdiction for the appointment of a successor.
Such court may thereupon, after such notice, if any, as it may prescribe,
appoint a successor. Any court-appointed successor Escrow Agent shall
automatically be replaced by a successor Escrow Agent subsequently appointed by
the Borrower and the Onshore Collateral Agent pursuant to this Section 5(c). Any
successor Escrow Agent appointed pursuant to this Section 5(c) shall be a bank
organized under the laws of Peru having its principal corporate office in Lima
[FOR BCP AGREEMENT ONLY: and at least 2 bank offices in the city of Arequipa].
Upon the acceptance of a designation hereunder, the successor or assign of the
Escrow Agent shall thereupon succeed to and be vested with all of the rights,
powers, privileges and duties of the Escrow Agent, and the retiring Escrow Agent
shall be discharged from any further duties and obligations as Escrow Agent
under this Agreement upon delivery to such successor or assign of the Escrow
Agent of the then balance of the Escrowed Portion.

          (d) The Borrower and the Onshore Collateral Agent may replace the
Escrow Agent at any time by written notice to the Escrow Agent, provided that
the consent of the Borrower shall not be required upon a Borrower Event of
Default and while it is Continuing. Such replacement shall become effective when
a successor or assign of the Escrow Agent shall have been designated by the
Borrower and the Onshore Collateral Agent and shall have accepted such
designation in writing and when any and all fees payable by the Borrower to the
Escrow Agent hereunder shall have been paid in full. The Escrow Agent shall
cooperate and lend all reasonable assistance to ensure a smooth transition for
the successor or assign of the Escrow Agent and shall deliver to such successor
or assign of the Escrow Agent the then balance of the Escrowed Portion.


                                                                               4

     6. Required Documentation and Information. The Borrower and the Onshore
Collateral Agent shall deliver to the Escrow Agent a list of their authorized
signatories for any notice, certificate, instrument, check, demand, request,
direction, instruction, waiver, receipt, consent or other document or
communication to be furnished to the Escrow Agent hereunder, and the Escrow
Agent shall be entitled to rely on such list until a new or amended list is
furnished in writing by the Borrower or the Onshore Collateral Agent, as
applicable.

     7. Compensation of the Escrow Agent. The Escrow Agent shall not be entitled
to receive separate compensation for its services hereunder.

     8. Termination of the Agreement and Disposal Balance of the Escrow Portion.
This Agreement shall terminate (i) prior to the occurrence of the Closing Date
and prior to the issuance of any Peruvian Bonds, the Borrower terminates and
reduces all Commitments to zero, or (ii) the earlier of (A) all Secured
Obligations have been paid or prepaid in full, and (B) so long as the Senior
Facility Loans Obligations have been paid or prepaid in full, the Borrower, with
the consent of the Onshore Collateral Agent, seeks to terminate this Agreement
as contemplated in Section 7.03 of the Peruvian Bonds Indenture. Such
termination shall be effected by means of joint written notification to be sent
by the Borrower and the Onshore Collateral Agent to the Escrow Agent indicating
that this Agreement shall be terminated. The Onshore Collateral Agent undertakes
to make such notification immediately upon the request of the Borrower, so long
as one of the conditions to the termination of this Agreement is satisfied. Upon
a termination of this Agreement, the outstanding balance of the Escrowed Portion
shall be released from escrow and distributed solely in accordance with
instructions from the Borrower.

     9. Notices. Any notice or other communication required or permitted
hereunder shall be deemed given upon delivery if delivered personally, or three
calendar days after mailing if sent by a national courier service if such
courier provides evidence of receipt; or the next Peruvian Business Day if sent
by facsimile and confirmed by mail as follows:

     (a)  If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager
          Facsimile: (51-54) 283-376


                                                                               5

          with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          United States of America
          Attention: ________
          Facsimile: ________

     (B)  If to the Onshore Collateral Agent, at:

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040

     (C)  If to the Escrow Agent, at:

          Banco de Credito del Peru
          Calle Centenario 156, Urb. Las Laderas de Melgarejo
          La Molina, Lima 13
          Peru
          Attention: Servicio de Custodia, Fideicomisos y Registro de Acciones
          Facsimile: ________

or to such other addresses as the Borrower, the Onshore Collateral Agent or the
Escrow Agent, as the case may be, shall designate in writing to the other
parties with at least fifteen calendar days prior notice.

     10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of Peru.

     11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one and the same document.

     12. Assignment. The Escrow Agent and the Borrower hereby expressly grants
their respective prior written consent, in accordance with Article 1435 of the
Civil Code, to the assignment of this Agreement ("cesion de posicion
contractual") by the Onshore Collateral Agent to any successor or assign of the
Onshore Collateral Agent appointed by the Senior Lenders pursuant to the Master
Security Agreement. Except as permitted by Sections 5(c) and 5(d) and this
Section 12, this Agreement and the rights or obligations of the Escrow Agent
hereunder may not be assigned to or assumed by any other person, either in whole
or in part, without the prior written consent of the Borrower and the Onshore
Collateral Agent.


                                                                               6

     13. Binding Agreement. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.

     14. Section Headings. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.

     15. Jurisdiction. All the discords or controversies that could be derived
of this Agreement, included those that refer to its nullity, disability,
effectiveness, enforcement or interpretation, shall be resolved before the
judges of the judicial district of Lima - Cercado; provided that the Borrower
and the Onshore Collateral Agent agree that any disputes arising out of or in
connection with the terms of the Master Security Agreement shall not be resolved
as set forth in this Section 15 but shall be resolved pursuant to the terms of
the Master Security Agreement.

     16. Amendments. Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) the Escrow Agent, (ii) the Borrower and (iii) the Onshore Collateral Agent.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

BANCO DE CREDITO DEL PERU


- -----------------------------
By:
Title:


SOCIEDAD MINERA CERRO VERDE S.A.A.


- -----------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- -----------------------------
By:
Title:


                                                                               7

                                    Exhibit 1

                         Exclusivity Instruction Notice

Lima, [date]

Messrs.
Banco de Credito del Peru
[Address of Escrow Agent]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to the Escrow Accounts Agreement (the "Agreement"), dated
________, entered into by and among Banco de Credito del Peru (the "Escrow
Agent"), Sociedad Minera Cerro Verde S.A.A. (the "Borrower") and Citibank del
Peru S.A. (the "Onshore Collateral Agent"). Unless otherwise defined herein, all
capitalized terms used herein shall have the meaning assigned to them in the
Agreement.

Pursuant to Section 4(b) of the Agreement, we hereby give you notice that
beginning immediately upon your receipt hereof, and until you receive an
Exclusivity Cessation Notice, you shall withdraw, transfer, apply, invest,
reinvest or otherwise deal with the Escrowed Portion solely in accordance with
written instructions executed by the undersigned. For the avoidance of doubt,
this notice constitutes an Exclusivity Instruction Notice.

Sincerely yours,

CITIBANK DEL PERU S.A.


- -----------------------------
By:
Title:

                                    Exhibit 2

                          Exclusivity Cessation Notice

Lima, [date]

Messrs.
Banco de Credito del Peru
[Address of Escrow Agent]
Peru

Attention: [Name or title]

Ladies and gentlemen:

Reference is made to (i) the Escrow Accounts Agreement (the "Agreement"), dated
________, entered into by and among Banco de Credito del Peru (the "Escrow
Agent"), Sociedad Minera Cerro Verde S.A.A. (the "Borrower") and Citibank del
Peru S.A. (the "Onshore Collateral Agent"), and (ii) our Exclusivity Instruction
Notice dated ________ and received by you on ________. Unless otherwise defined
herein, all capitalized terms used herein shall have the meaning assigned to
them in the Agreement.

Pursuant to Section 4(c) of the Agreement, we hereby give you notice that
beginning immediately upon your receipt hereof, and until you receive a new
Exclusivity Instruction Notice, you shall withdraw, transfer, apply, invest,
reinvest or otherwise deal with the Escrowed Portion solely in accordance with
the Borrower's instructions. For the avoidance of doubt, this notice constitutes
an Exclusivity Cessation Notice.

Sincerely yours,

CITIBANK DEL PERU S.A.


- -----------------------------
By:
Title:

                                      EXHIBIT G - Form of prenda for SMCV Shares

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for this SHARE PLEDGE
AGREEMENT (the "Agreement") entered into by and among:

(1)  SMM CERRO VERDE NETHERLANDS B.V., a company organized under the laws of the
     Netherlands, having its registered office at ____________, duly represented
     by ___________________ ("Sumitomo");

(2)  COMPANIA DE MINAS BUENAVENTURA S.A.A., a company organized under the laws
     of Peru having its registered office at ____________, duly represented by
     ___________________ ("BVN");

(3)  CYPRUS CLIMAX METALS COMPANY, a company organized under the laws of
     ________ having its registered office at ____________, duly represented by
     ___________________ ("Cyprus", and together with Sumitomo and BVN, the
     "Shareholders"); and

(4)  CITIBANK DEL PERU S.A., a bank incorporated and existing under the laws of
     Peru, with Taxpayer Registry No. ________, duly represented by
     ___________________, identified with ________ No. ________, as per the
     power of attorney registered in Entry Card ________ of File _____ of the
     Public Registry of Companies for Lima (together with its successors and
     assigns, the "Onshore Collateral Agent").

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Shareholders are the major shareholders of Sociedad Minera Cerro Verde
     S.A.A. (the "Borrower"), jointly representing approximately 92.78% of the
     outstanding voting stock of the Borrower.

1.2  Sumitomo owns 73,511,763 SMCV Shares, BVN owns 63,833,717 SMCV Shares and
     Cyprus owns 187,500,306 SMCV Shares (collectively, the "Original Pledged
     Shares").

1.3  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities for the operation of the Cerro
     Verde copper mine, including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru.

1.4  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project"), for which purposes the Borrower intends to obtain
     financing in an

     approximate amount of Four Hundred and Fifty Million Dollars of the United
     States of America (US$ 450,000,000.00);

1.5  The Borrower is entering into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.6  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the Borrower undertaken by each of these financial institutions in
     accordance with the Master Participation Agreement.

1.7  The Borrower intends to issue the Peruvian Bonds in the Peruvian market
     through a bond program in order to complete the financing that it requires
     for the development of the Sulfide Project.

1.8  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent in order to
     set forth, among other things, the terms of the security interests to be
     granted by the Borrower and the Shareholders, as the case may be, in favor
     of the Onshore Collateral Agent, who acts for the benefit and on behalf of
     the Secured Parties, to secure the timely and full payment or prepayment of
     the Secured Obligations. The Senior Lenders have appointed Citibank del
     Peru S.A. as Onshore Collateral Agent in the Master Security Agreement. The
     intent of the parties to the Master Security Agreement is that, prior to
     the first issuance of the Peruvian Bonds, the Common Representative will
     enter into a New Party Accession Agreement and thereupon the Peruvian
     Bondholders acting through the Common Representative will, collectively,
     have all of the rights and obligations of a Senior Lender under the Master
     Security Agreement, including, without limitation, the right of the Common
     Representative, on behalf of the Peruvian Bondholders, to benefit as a
     Senior Lender from the security to be granted by the Borrower and the
     Shareholders, as the case may be, to the Secured Parties pursuant to the
     Master Security Agreement and the other Security Documents, including,
     without limitation, the security interest created by this Agreement.

1.9  Pursuant to the Master Security Agreement, the Borrower has agreed to cause
     the Shareholders to, on or prior to the Closing Date, create in favor of
     the Onshore Collateral Agent, for the benefit and on behalf of the Secured
     Parties, as security for the Secured Obligations, a first priority pledge
     of the Pledged Shares (as defined herein).


                                                                               2

2.   INTERPRETATION

2.1  The Exhibit hereto forms part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibit hereto.

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference. In addition, for the exclusive purpose of
     this Agreement, the following capitalized words and expressions shall have
     the meanings set forth below:

          "Agreement": means this Share Pledge Agreement.

          "Business Day": means a day (other than a Saturday or a Sunday) on
     which banks are open for business in Lima, Peru.

          "CAVALI": means CAVALI ICLV S.A.

          "Certificates": means the share certificates issued by the Borrower
     which represent such Originally Pledged Shares and Newly Issued Pledged
     Shares, if any, which are registered in the Share Registry (as opposed to
     registered in electronic form with CAVALI).

          "Civil Code": means the Civil Code approved by Legislative Decree 295,
     as amended.

          "Code of Civil Procedure": means the General Revised Text of the Code
     of Civil Procedure approved by Legislative Decree 768, as amended.

          "Commercial Instruments Law": means the Commercial Instruments Law
     approved by Law 27287, as amended.

          "Corporations General Law": means the Corporations General Law
     approved by Law 26887, as amended.

          "Guaranty": means the Pledged Shares and any right pertaining thereto
     as provided for in this Agreement.

          "Lien's Amount": has the meaning set forth in Section 4.1.

          "Newly Issued Pledged Shares": has the meaning set forth in Section
     3.1.

          "Original Pledged Shares": has the meaning set forth in Section 1.2.


                                                                               3

          "Parties": means the parties to this Agreement; and "Party" means any
     one of them.

          "Pledged Shares": has the meaning set forth in Section 3.1.

          "Share Registry": means the share registry of the Borrower.

          "SMCV Shares": the shares of the Borrower held by or on behalf of the
     Shareholders at any time.

3.   CREATION OF THE PLEDGE

3.1  Pursuant to Article 1055 et. seq. of the Civil Code, Article 109 of the
     Corporations General Law and Article 63 of the Commercial Instruments Law,
     as security for the payment or prepayment in full of the Secured
     Obligations, the Shareholders hereby grant in favor of the Onshore
     Collateral Agent, for the benefit and on behalf of the Secured Parties, a
     first priority pledge in all of Shareholders' right, title and interest in,
     to and under: (i) the Original Pledged Shares and (ii) any and all
     additional SMCV Shares issued by the Borrower or acquired by the
     Shareholders, in either case beginning on the date of this Agreement and
     until this Agreement is terminated pursuant to Section 6.2, as a
     consequence of the re-expression of accounts of the Borrower, the
     capitalization of earnings obtained by the Borrower and/or any other reason
     (the "Newly Issued Pledged Shares"), provided that the Newly Issued Pledged
     Shares shall be automatically incorporated into the first priority pledge
     created by this Agreement upon their acquisition by the Shareholders (as
     described in Section 5.3). For the purpose of this Agreement and its
     amendments, the Original Pledged Shares, collectively with the Newly Issued
     Pledged Shares, are defined as the "Pledged Shares".

3.2  This pledge secures the Secured Obligations of the Borrower with the
     Secured Parties on a pari passu basis. Accordingly, all Secured Parties
     shall share on the security interest created herein as well as on any and
     all proceeds resulting from the enforcement thereof as contemplated in
     Section 10.

3.3  The Onshore Collateral Agent shall be the only Party entitled to exercise
     any and all rights and prerogatives hereunder, including, without
     limitation, any enforcement action, and shall exercise such rights and
     prerogatives solely in accordance with the provisions of this Agreement and
     the Master Security Agreement.

4.   LIEN'S AMOUNT

4.1  The Parties hereby agree that the amount of the lien created by this pledge
     is the total amount of the Secured Obligations, which principal amount is
     an amount not to


                                                                               4

     exceed Four Hundred and Fifty Million Dollars of the United States of
     America (US$ 450,000,000.00), plus all applicable interest, expenses and
     fees as well as any and all costs and expenses ("costas y costos") in the
     event that the foreclosure of the Guaranty is necessary (the "Lien's
     Amount").

4.2  The Parties hereby agree that:

     (a)  The total amount secured by this pledge shall include any amount which
          may be payable to the Secured Parties pursuant to Section 4.1; and

     (b)  The Lien's Amount shall not limit in any manner the exercise by the
          Onshore Collateral Agent of its rights and/or remedies pursuant to the
          terms and conditions of this Agreement and the Master Security
          Agreement.

4.3  The Shareholders and the Onshore Collateral Agent may agree, from time to
     time, subject to the terms and conditions of the Master Security Agreement,
     to reduce the amount of this pledge in accordance with Articles 1083 and
     1115 of the Civil Code, provided that the Lien's Amount resulting from such
     reduction fully covers its Secured Obligations. Accordingly, the Onshore
     Collateral Agent, for the benefit and on behalf of the Secured Parties,
     subject to the terms and conditions of the Master Security Agreement,
     undertakes to sign any and all documents and public deeds that may be
     required to reflect such reduction promptly upon the agreement of the
     Shareholders and the Onshore Collateral Agent. The Shareholders hereby
     waive their respective right under Articles 1083 and 1116 of the Civil Code
     to request any judge for the reduction of the Lien's Amount.

4.4  The Shareholders hereby waive their respective right under Article 1073 of
     the Civil Code to request any judge for the substitution of this pledge.

5.   EXTENT OF THE PLEDGE

5.1  The first priority pledge created hereby extends to the Pledged Shares and
     all right, title and interest that may derive therefrom for the
     Shareholders, whether presently or in the future until this Agreement is
     terminated pursuant to Section 6.2.

5.2  The Parties hereby agree that each Shareholder shall have the unrestricted
     right to exercise any and all economic and/or political (i.e., voting)
     rights permitted by law and the Borrower's constituent documents and
     by-laws relating to holders of the Pledged Shares, including the right to
     vote and to receive cash or stock dividends until the instruction described
     in the first paragraph of Section 9.2 has been delivered, whereupon such
     rights of each Shareholder shall be transferred to and exercised by the
     Onshore Collateral Agent.


                                                                               5

5.3  This first priority pledge shall extend to any and all Newly Issued Pledged
     Shares that the Shareholders may acquire in the future until this Agreement
     is terminated pursuant to Section 6.2, which such Newly Issued Pledged
     Shares shall be incorporated into the first priority pledge created
     hereunder upon their acquisition by the applicable Shareholder. For these
     purposes, the Shareholder hereby consents to (i) the automatic
     incorporation of any and all Newly Issued Pledged Shares into this first
     priority pledge in favor of the Onshore Collateral Agent, for the benefit
     and on behalf of the Secured Parties, in accordance with the terms and
     conditions of this Agreement and (ii) to the registration of this first
     priority pledge with CAVALI and/or the Share Registry, as applicable,
     without the need or further consent or notice from the relevant
     Shareholder.

5.4  The first priority pledge created hereunder, including any and all
     amendments described herein, shall be registered with CAVALI and/or the
     Share Registry, as applicable. For these purposes, the Shareholders hereby
     undertake to cause the necessary documents to be filed for recordation
     before CAVALI and/or the Share Registry, as applicable, within ten (10)
     Business Days following the execution of the public deed resulting from
     this Agreement by all of the Parties and obtain the registration thereof in
     CAVALI and/or the Share Registry, as applicable, on or before the Closing
     Date.

5.5  The Shareholders agree to, on or before the Closing Date, deliver and
     endorse for guaranty purposes to and in favor of the Onshore Collateral
     Agent, for the benefit and on behalf of the Secured Parties, the
     Certificates, if any, representing the Originally Pledged Shares. In
     accordance with numeral 5 of Article 100 of the Corporations General Law,
     the Certificates must bear the following annotation of the first priority
     pledge created hereunder:

          "In accordance with numeral 5 of Article 100 of the Corporations
          General Law, the shares represented by this certificate are pledged in
          favor of Citibank del Peru S.A., as Onshore Collateral Agent, for the
          benefit and on behalf of the Secured Parties, in the terms and
          conditions set forth in the public deed of Share Pledge Agreement,
          executed on ________ before Notary Public ________".

     The Shareholders further agree to, within ten (10) Business Days following
     the issuance by the Borrower or acquisition by any of the Shareholders of
     Newly Issued Pledged Shares, deliver and endorse for guaranty purposes to
     and in favor of the Onshore Collateral Agent, for the benefit and on behalf
     of the Secured Parties, the Certificates, if any, representing such Newly
     Issued Pledged Shares. In accordance with numeral 5 of Article 100 of the
     Corporations General Law, the Certificates must bear the following
     annotation of the first priority pledge created hereunder:

          "In accordance with numeral 5 of Article 100 of the Corporations
          General Law, the shares represented by this certificate are pledged in
          favor of [Name


                                                                               6

          of Onshore Collateral Agent], as Onshore Collateral Agent, for the
          benefit and on behalf of the Secured Parties, in the terms and
          conditions set forth in the public deed of Share Pledge Agreement,
          executed on ______ before Notary Public __________".

     The Onshore Collateral Agent shall keep in custody all Certificates so
     delivered and endorsed by any and all Shareholders.

5.6  The first priority pledge created hereunder is granted exclusively in favor
     of the Onshore Collateral Agent for the benefit and on behalf of the
     Secured Parties.

6.   INDIVISIBILITY OF THE COLLATERAL

6.1  This Agreement and the Pledged Shares subject thereto (as a whole or
     considering its individual parts) are indivisible and are intended to
     secure the full and timely payment or prepayment by the Borrower of the
     Secured Obligations.

6.2  Except to the extent set forth in Section 10, the first priority pledge
     created hereunder shall therefore remain in force and effect until the
     earlier of (i) all the Secured Obligations have been paid or repaid in
     full, even if the pledge and/or the lien created hereunder or under any and
     all amendments to this Agreement is divided or (ii) so long as the Senior
     Facility Loans Obligations have been paid or prepaid in full, the Borrower,
     with the consent of the Onshore Collateral Agent, seeks to terminate this
     Agreement as contemplated under Section 7.03 of the Peruvian Bonds
     Indenture. The Guaranty shall not be totally or partially released,
     discharged, removed or separated from this pledge, until all of the Secured
     Obligations have been paid or prepaid in full by the Borrower (in the case
     of clause (i)) or the Onshore Collateral Agent so consents (in the case of
     clause (ii)).

6.3  Notwithstanding the foregoing, the Onshore Collateral Agent shall release
     certain Pledged Shares from this pledge and return the Certificates
     corresponding to such Pledged Shares to the owner thereof as set forth in
     Section 11(iii) to the extent that any of such Pledged Shares are sold,
     assigned, leased, transferred or otherwise disposed of with the prior
     written consent of the Secured Parties or in a transaction that is a
     transfer that does not violate the terms of the Master Participation
     Agreement and the Transfer Restrictions Agreement.

7.   OBLIGATIONS OF THE SHAREHOLDERS

Each of the Shareholders undertakes the following:

(a)  Not to impose any Lien on the Pledged Shares, or execute any other
     agreement, contract or act in connection with the Pledged Shares except as
     permitted under the


                                                                               7

     Master Participation Agreement, the Master Security Agreement and the
     Transfer Restrictions Agreement without the prior written consent of the
     Onshore Collateral Agent; and

(b)  To execute any and all further documents, endorsements, financing
     statements, agreements and instruments, and take all such further actions,
     as may be reasonably requested by the Onshore Collateral Agent in order to
     cause the pledge of the Pledged Shares to constitute a valid security
     interest, perfected in accordance with Peruvian law.

8.   REPRESENTATIONS AND WARRANTIES

8.1  As of the date hereof, each of the Shareholders makes the following
     representations and warranties to the Onshore Collateral Agent:

     (a)  It is the sole and exclusive owner of or has legal title to the
          relevant Pledged Shares owned thereby, and it has therefore full
          right, power and authority to enter into this Agreement without
          violating any contractual, legal or other obligation to any entity or
          person;

     (b)  Upon registration, this pledge will create a first and preferential
          ranking lien on the relevant Pledged Shares owned thereby; and

     (c)  The relevant Pledged Shares owned thereby are free from any lien and
          encumbrance other than the pledge created by this Agreement and are
          not subject to any judicial or extra-judicial measure that in any way
          may limit its free ownership and availability.

9.   FORECLOSURE OF THE GUARANTY

9.1  Foreclosure and enforcement of the Guaranty shall only be made in
     accordance with the terms of the Master Security Agreement and the
     provisions contemplated in this Section 9.

9.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take Borrower Enforcement Action with respect to
     the Guaranty pursuant to the terms of the Master Security Agreement, the
     Onshore Collateral Agent shall have the right to proceed to foreclose upon
     the Guaranty. Such foreclosure shall take place, at the discretion of the
     Onshore Collateral Agent, in accordance with either of the following
     Borrower Enforcement Actions, taking into account any and all applicable
     securities market regulations:


                                                                               8


     (a)  Sale of the Pledged Shares

          In accordance with Article 1069 of the Civil Code, the Pledged Shares
          shall be sold, in whole or in part (and if in part ratably in
          accordance with each Shareholder's pro rata share of the then
          aggregate Pledged Shares), in a commercially reasonable manner by an
          authorized stockbroker ("sociedad agente de bolsa") with principal
          offices in Lima, Peru (the "Stockbroker"), appointed by the Onshore
          Collateral Agent, acting as instructed by the Administrative Agent,
          through a stock exchange transaction ("operacion bursatil") or through
          an extra-stock exchange transaction ("operacion extra-bursatil"), as
          the Onshore Collateral Agent may decide, acting as instructed by the
          Administrative Agent.

          Expenses incurred by the Stockbroker in any sale hereunder will be
          deducted from the sale price.

     (b)  Judicial Action ("ejecucion judicial")

          Alternatively, the Guaranty may be foreclosed upon, in whole or in
          part (and if in part ratably in accordance with each Shareholder's pro
          rata share of the then aggregate Pledged Shares), through a judicial
          procedure in accordance with Article 720 et seq. of the Code of Civil
          Procedure, before the judges of the judicial district of Lima -
          Cercado.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

          Upon a Borrower Event of Default and while it is Continuing, the
          Onshore Collateral Agent shall have the right to request an appraisal
          of the Guaranty, which appraisal shall be performed by any one of the
          pre-approved appraisers listed in Exhibit 1 or any other appraiser
          agreed to by the Parties, in which case for all purposes concerning
          the enforcement of the Guaranty through a judicial procedure as
          referred to in this Section 9.2(b) the aggregate value of the Pledged
          Shares shall be the aggregate value thereof as determined by such
          appraiser in such appraisal.

9.3  Each of the Shareholders hereby agrees and consents that the ability of the
     Onshore Collateral Agent to foreclose upon the Guaranty as provided in
     Section 9.2(a) implies that, without any additional authorization, consent
     or power of attorney from or granted by the Shareholders, upon such
     foreclosure, the Onshore Collateral Agent will be in the position to do the
     following, in each case acting as instructed by the Administrative Agent
     and in accordance with the terms of this Agreement and the Master Security
     Agreement:


                                                                               9

     (a)  To instruct any Stockbroker to transfer the Pledged Shares being
          foreclosed upon from that Stockbroker's shares account ("cuenta
          matriz") to the shares account ("cuenta matriz") of another
          Stockbroker;

     (b)  To instruct any Stockbroker to maintain the Pledged Shares being
          foreclosed upon in that Stockholder's shares account ("cuenta
          matriz");

     (c)  To instruct any Stockbroker to sell the Pledged Shares being
          foreclosed upon in the terms and conditions provided in the sale order
          of the Onshore Collateral Agent;

     (d)  To instruct any Stockbroker to act as structuring agent
          ("estructurador") in connection with the sale transaction of the
          Pledged Shares being foreclosed; and

     (e)  To instruct any Stockbroker to register in electronic form with CAVALI
          any and all of the Pledged Shares being foreclosed which are
          registered in the Share Registry.

     For purposes of foreclosing upon the Guaranty as provided in Section
     9.2(a), each of the Shareholders hereby agrees that no further
     authorization, consent or power of attorney from or granted by the
     Shareholders to any Stockbroker shall be necessary for the Onshore
     Collateral Agent to, acting as instructed by the Administrative Agent,
     deliver any of the instructions described in this Section 9.3 or sell the
     Pledged Shares being foreclosed upon as permitted under Peruvian law,
     including, but not limited to, through a private sale offer, a stock
     exchange transaction ("operacion bursatil"), an extra-stock exchange
     transaction ("operacion extra-bursatil"), a public sale offer ("oferta
     publica de venta"), a public exchange offer ("oferta publica de
     intercambio") or a public tender offer ("oferta publica de compra").

     For purposes of foreclosing upon the Guaranty as provided in Section
     9.2(a), each of the Shareholders hereby further agrees that (i) any of the
     instructions described in this Section 9.3 given by the Onshore Collateral
     Agent to any Stockbroker shall suffice for such Stockbroker to sell the
     Pledged Shares being foreclosed upon or follow such instruction, and (ii)
     any of the instructions described in this Section 9.3 given by any of the
     Shareholders to any Stockbroker in connection with the Pledged Shares being
     foreclosed upon shall not be effective nor followed by the Stockbroker
     unless it is consented to by the Onshore Collateral Agent, acting as
     instructed by the Administrative Agent.

     The Onshore Collateral Agent is hereby expressly authorized to execute any
     and all further documents, endorsements, statements, agreements and
     instruments, and to take all such further actions, as may be reasonably
     required in order to foreclose upon and enforce the Guaranty pursuant to
     Section 9.2(a), and to deliver and


                                                                              10

     endorse the Certificates in property to the purchaser of the Pledged Shares
     so sold, if applicable.

9.4  Each of the Shareholders hereby waives its respective right to make any
     claim in connection with the foreclosure upon the Guaranty against the
     Onshore Collateral Agent to the extent that the Onshore Collateral Agent
     fully complies with the procedure for foreclosure set forth in this Section
     9 and the relevant provisions of the Master Security Agreement.

10.  PROCEEDS OF THE FORECLOSURE OF THE GUARANTY

10.1 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(a), the proceeds of such foreclosure shall be allocated by the
     Onshore Collateral Agent in accordance with the order of priority and terms
     set forth in Section 4.18 of the Master Security Agreement. Once the
     Secured Obligations have been paid or prepaid in full, any balance of the
     proceeds of the sale of the Guaranty shall be paid and delivered to the
     Shareholders.

10.2 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(b), the proceeds of such foreclosure shall be allocated by the
     Onshore Collateral Agent in accordance with the applicable rules under the
     Code of Civil Procedure and in accordance with the order of priority and
     terms set forth in Section 4.18 of the Master Security Agreement. Once the
     Secured Obligations have been paid or prepaid in full, any balance of the
     proceeds of the sale of the Guaranty shall be paid and delivered to the
     Shareholders.

11.  OBLIGATION OF THE ONSHORE COLLATERAL AGENT

The Onshore Collateral Agent hereby covenants and agrees to promptly release the
pledge over the Pledged Shares, return the Certificates representing such
Pledged Shares to the owner thereof, and to take all such actions necessary to
formalize such release of the pledge over the Pledged Shares, in the event that
(i) prior to the occurrence of the Closing Date and prior to the issuance of any
Peruvian Bonds, the Borrower terminates and reduces all Commitments to zero,
(ii) the first priority pledge created hereunder no longer remains in full force
and effect as provided in Section 6.2, or (iii) some or all of the Pledged
Shares are transferred with the prior written consent of the Secured Parties or
in a transaction that does not violate the terms of the Master Participation
Agreement and the Transfer Restrictions Agreement, in which case the Onshore
Collateral Agent shall timely release the pledge over the relevant Pledged
Shares and return the Certificates representing such Pledged Shares to the owner
thereof in order to allow such transaction upon receipt of a notice duly
executed by the Administrative Agent's legal representative so indicating.


                                                                              11

12.  ASSIGNMENT AND RELEASE OF THE PLEDGE

12.1 The Shareholders hereby expressly grant their respective prior written
     consent, in accordance with Article 1435 of the Civil Code, to the
     assignment of this Agreement ("cesion de posicion contractual") by the
     Onshore Collateral Agent to any successor or assign of the Onshore
     Collateral Agent appointed by the Senior Lenders pursuant to the Master
     Security Agreement.

12.2 The release of the Pledged Shares requires express and written confirmation
     by the Onshore Collateral Agent, on behalf of the Secured Parties, and must
     be formalized by means of a public deed registered with CAVALI and/or the
     Share Registry, as applicable. Subject to Section 11, the Onshore
     Collateral Agent hereby undertakes, promptly upon the relevant
     Shareholder's request if pursuant to Section 6.3, to execute and deliver
     any and all documents and public deeds that may be required to formalize
     such release at the cost of the Borrower.

13.  NOTICES

Any notice, request, demand, consent, designation, direction, instruction,
certificate and other required communications to be given hereunder between the
Parties shall be in writing and shall be addressed, respectively, as follows, or
to such other address as may be hereafter furnished for this purpose by such
Party:

     If to Cyprus, at:

          Cyprus Climax Metals Company
          c/o Phelps Dodge Mining Company
          One N. Central Avenue
          Phoenix, Arizona 85004
          United States of America
          Attention: President
          Facsimile: (602) 366-7383

          with a copy to:

          Phelps Dodge Corporation
          One N. Central Avenue
          Phoenix, Arizona 85004
          United States of America
          Attention: General Counsel
          Facsimile: (602) 366-7383


                                                                              12

     If to Sumitomo, at:

          SMM Cerro Verde Netherlands B.V.
          c/o Sumitomo Metal Mining Co., Ltd.
          11-3, 5-Chome Shimbashi,
          Minato-ku, Tokyo 105
          Japan
          Attention: General Manager, Mineral Resources Division
          Facsimile: (81)-3-3436-7997

     If to BVN, at:

          Compania de Minas Buenaventura S.A.A.
          Carlos Villaran 790
          Urb. Santa Catalina
          Lima 13
          Peru
          Attention: President
          Facsimile: (51-1) 471-7349

     If to the Onshore Collateral Agent, at:

          Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040

14.  GOVERNING LAW AND JURISDICTION

14.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

14.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, enforcement
     or interpretation of this Agreement shall be resolved before the judges of
     the judicial district of Lima - Cercado; provided that the Parties agree
     that any disputes arising out of or in connection with the terms of the
     Master Security Agreement shall not be resolved as set forth in this
     Section 14.2 but shall be resolved pursuant to the terms of the Master
     Security Agreement.


                                                                              13

15.  SEVERABILITY

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as most nearly to retain the intent of
the Parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.

16.  AMENDMENTS

Neither this Agreement nor any terms hereof may be amended, supplemented or
modified other than pursuant to a written instrument executed by (i) each of the
Shareholders and (ii) the Onshore Collateral Agent.

Mr. Notary, please add the pertinent introduction and conclusion as required by
law.

                                                               Lima, _____, 2005

SMM CERRO VERDE NETHERLANDS B.V.


- ------------------------------------
Name:
Title:


COMPANIA DE MINAS BUENAVENTURA S.A.A.


- ------------------------------------
Name:
Title:


CYPRUS CLIMAX METALS COMPANY


- ------------------------------------
Name:
Title:


                                                                              14

CITIBANK DEL PERU S.A.


- ------------------------------------
Name:
Title:


                                                                              15

                                    EXHIBIT 1

                         LIST OF PRE-APPROVED APPRAISERS

Name:      Apoyo Consultoria
Address:   Calle Gonzales Larranaga 265
           San Antonio, Lima 18
           Peru
Phone:     (51-1) 213-1100
Fax:       (51-1) 241-4032

Name:      Macroconsult
Address:   Calle General Borgono 1156
           Lima 18
           Peru
Phone:     (51-1) 221-2695
Fax:       (51-1) 221-2696

Name:      Interinvest
Address:   Av. Carlos Villaran 140
           Torre A, 18th floor
           Lima 13
           Peru
Phone:     (51-1) 219-2200
Fax:       (51-1) 219-2220

Name:      Enfoca - Gestion Empresarial
Address:   Los Pinos 222
           Lima 27
           Peru
Phone:     (51-1) 222-0808
Fax:       _______________

Name:      Alonso y Asociados
Address:   Av. Republica de Panama 3030
           Of. 701
           Lima 27
           Peru
Phone:     (51-1) 463-1818 and (51-1) 463-5616
Fax:       _______________


                                                                              16

                                                    EXHIBIT H - Form of hipoteca

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for the MORTGAGE AGREEMENT
entered into by and between:

(1)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _____, identified with _____ No. _____, as per power of
     attorney registered in Entry Card _____ of File No. _____ of the Public
     Registry of Companies for Lima (the "Borrower"); and

(2)  [CITIBANK DEL PERU S.A.], a bank incorporated and existing under the laws
     of Peru, with Taxpayer Registry No. _____, duly represented by _____,
     identified with _____ No. _____, as per power of attorney registered in
     Entry Card _____ of File No. _____ of the Public Registry of Companies for
     Lima (together with its successors and assigns, the "Onshore Collateral
     Agent").

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities, for the operation of the Cerro
     Verde copper mine, including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru.

1.2  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project"), for which purposes the Borrower [intends to
     obtain] / [has obtained] financing in an approximate amount of Four Hundred
     and Fifty Million Dollars of the United States of America (US$
     450,000,000.00).

1.3  The Borrower has entered into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.4  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the Borrower undertaken by each of these financial institutions in
     accordance with the Master Participation Agreement.

1.5  The Borrower [intends to issue] / [has issued] the Peruvian Bonds in the
     Peruvian market through a bond program in order to complete the financing
     that it requires for the development of the Sulfide Project.

1.6  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent to set
     forth, among other things, the terms of the security interests to be
     granted by the Borrower in favor of the Onshore Collateral Agent, who acts
     for the benefit and on behalf of the Secured Parties, to secure the timely
     and full payment or prepayment of the Secured Obligations. The Senior
     Lenders have appointed [Citibank del Peru S.A.] as Onshore Collateral Agent
     [in the Master Security Agreement]. [The intent of the parties to the
     Master Security Agreement is that, prior] / [Prior] to the first issuance
     of the Peruvian Bonds, the Common Representative [will enter] / [entered]
     into a New Party Accession Agreement and thereupon the Peruvian Bondholders
     acting through the Common Representative [will, collectively, have] / [had,
     collectively,] all of the rights and obligations of a Senior Lender under
     the Master Security Agreement, including, without limitation, the right of
     the Common Representative, on behalf of the Peruvian Bondholders, to
     benefit as a Senior Lender from the security to be granted by the Borrower
     to the Secured Parties pursuant to the Master Security Agreement and the
     other Security Documents, including, without limitation, the security
     interest created by this Agreement.

1.7  Pursuant to the Master Security Agreement, the Borrower has undertaken to
     secure the Secured Obligations by granting a mortgage over all Real
     Property owned by the Borrower as of the date hereof.

1.8  The Borrower and the Onshore Collateral Agent have entered into this
     Agreement for the purpose of creating a mortgage over the Real Property in
     favor of the Onshore Collateral Agent, for the benefit and on behalf of the
     Secured Parties.

2.   INTERPRETATION

2.1  The Exhibits hereto form part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibits hereto.

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference.

     In addition, for the exclusive purpose of this Agreement, the following
     capitalized words and expressions shall have the meanings set forth below:


                                                                               2

          "Agreement": means this Mortgage Agreement.

          "Buildings and Facilities": has the meaning set forth in Section
     5.1(b).

          "Business Day": means a day (other than a Saturday or a Sunday) on
     which banks are open for business in Lima, Peru.

          "Civil Code": means the Civil Code approved by Legislative Decree 295,
     as amended.

          "Code of Civil Procedure": means the General Revised Text of the Code
     of Civil Procedure approved by Legislative Decree 768, as amended.

          "Guaranty": means the Real Property and all Buildings and Facilities,
     as well as all rights to insurance and expropriation compensations without
     any limitation that Borrower may be entitled to for any loss, destruction,
     deterioration or expropriation of any of the foregoing.

          "Lien's Amount": has the meaning set forth in Section 4.1.

          "Mortgage": has the meaning set forth in Section 3.1.

          "Parties": means the parties to this Agreement; and "Party" means any
     one of them.

          "Real Property": means all real property listed in Exhibit 1,
     including any Buildings and Facilities.

          "Update": has the meaning set forth in Section 5.3.

3.   PURPOSE AND TERM OF THE MORTGAGE

3.1  Pursuant to Articles 1097 et seq. of the Civil Code, the Borrower, as the
     sole and exclusive owner of the Real Property, hereby grants a first and
     preferential ranking mortgage (the "Mortgage") over any and all of the Real
     Property, in favor of the Onshore Collateral Agent, for the benefit and on
     behalf of the Secured Parties, as security for the timely and full payment
     or prepayment by the Borrower of the Secured Obligations.

3.2  This Mortgage secures the Secured Obligations of the Borrower with the
     Secured Parties on a pari passu basis. Accordingly, all Secured Parties
     shall share in the security interest created herein as well as in any and
     all proceeds resulting from the enforcement thereof as contemplated in
     Section 12.


                                                                               3

3.3  The Onshore Collateral Agent shall be the only Party entitled to exercise
     any and all rights and prerogatives hereunder, including, without
     limitation, any enforcement action, and shall do it solely in accordance
     with the provisions of this Agreement and the Master Security Agreement.

4.   LIEN'S AMOUNT

4.1  The Parties hereby agree that the amount of the lien created by this
     Mortgage is the total amount of the Secured Obligations, which principal
     amount is an amount not to exceed [Four Hundred and Fifty Million Dollars
     of the United States of America (US$ 450,000,000.00)], plus all applicable
     interest, expenses and fees as well as any and all judicial costs and
     expenses ("costas y costos") in the event that a judicial proceeding to
     foreclose and sell the Guaranty is necessary (the "Lien's Amount").

4.2  The Parties hereby agree that:

     (a)  the total amount secured by this Mortgage shall include any amount
          which may be payable to the Secured Parties pursuant to Section 4.1;
          and

     (b)  the Lien's Amount shall not limit in any manner the exercise by the
          Onshore Collateral Agent of its rights and/or remedies pursuant to the
          terms and conditions of this Agreement and the relevant provisions of
          the Master Security Agreement.

4.3  The Borrower and the Onshore Collateral Agent may agree, from time to time,
     subject to the terms and conditions of the Master Security Agreement, to
     reduce the Lien's Amount under this Mortgage in accordance with Article
     1115 of the Civil Code, provided that the Lien's Amount resulting from such
     reduction fully covers its Secured Obligations. Accordingly, the Onshore
     Collateral Agent, for the benefit and on behalf of the Secured Parties,
     subject to the terms and conditions of the Master Security Agreement,
     hereunder undertakes to execute and deliver any and all documents and
     public deeds that may be required in order to reflect such reduction
     promptly upon the agreement of the Borrower and the Onshore Collateral
     Agent. The Borrower hereby waives its right under Article 1116 of the Civil
     Code to request any judge for the reduction of the Lien's Amount.

5.   EXTENT OF THE MORTGAGE

5.1  This Mortgage over the Real Property comprises, to the fullest extent
     permitted by law, each and every right and asset, which by fact or by law
     pertains to the Real Property. Such rights and assets include without
     limitation:


                                                                               4

     (a)  the Real Property listed in Exhibit 1, as amended from time to time,
          including entrance, soil, subsoil, exits, uses, enjoyment, customs and
          easement;

     (b)  the buildings and facilities owned by the Borrower, that are located
          within the internal boundaries of the Real Property, including all
          facilities built, erected or installed. Such buildings and facilities
          are listed and described (including their respective valuation) in
          Exhibit 1, as amended from time to time (collectively, the "Buildings
          and Facilities");

     (c)  any and all payments made under any insurance policy in respect of the
          Real Property, as well as any and all compensation that the Borrower
          may be entitled to because of the expropriation of the Real Property;
          and

     (d)  in general terms, everything corresponding to the Real Property de
          facto or de jure, and any and all improvements that may be made in the
          Real Property, with no limitation whatsoever.

     Exhibit 1 lists all Real Property existing as of the date hereof with an
     individual book value equal to or in excess of One Million Dollars of the
     United States of America (US$ 1,000,000.00) which have an aggregate book
     value in excess of Ten Million Dollars of the United States of America (US$
     10,000,000.00).

5.2  The Buildings and Facilities constitute integral or accessory parts and
     appurtenances of the Real Property pursuant to the provisions of Articles
     1101, 887 and 888 of the Civil Code.

5.3  Pursuant to the terms of the Master Security Agreement, the Borrower has
     agreed to amend this Mortgage, from time to time before this Agreement is
     terminated pursuant to Section 6.2, by way of updating Exhibit 1.
     Accordingly, the Borrower hereby undertakes to execute any and all
     documents and public deeds (each an "Update") necessary in order to modify
     and include as part of Exhibit 1, along with all of the Real Property
     already listed therein, a description of any additional Real Property that
     have been acquired by the Borrower or additional Buildings and Facilities
     that have been built, erected and/or installed on the Real Property that
     have an individual book value equal to or in excess of One Million Dollars
     of the United States of America (US$ 1,000,000.00) from the time that
     Exhibit 1 was last modified, amended or restated, with independence of the
     accumulated value of the Real Property acquired, provided that the Borrower
     shall only be required to perform the periodic amendment obligations
     described in this Section 5.3 if any modification is produced and if at any
     time the aggregate book value of the Real Property with an individual book
     value equal to or in excess of One Million Dollars of the United States of
     America (US$ 1,000,000.00) exceeds Ten Million Dollars of the United States
     of America (US$ 10,000,000.00).


                                                                               5

5.4  This Mortgage is granted exclusively in favor of the Onshore Collateral
     Agent for the benefit and on behalf of the Secured Parties.

6.   INDIVISIBILITY OF THE GUARANTY

6.1  This Mortgage and the Guaranty subject hereto (as a whole or considering
     its individual parts) are indivisible and are intended to secure timely and
     full payment or prepayment by the Borrower of the Secured Obligations.

6.2  Except to the extent set forth in Section 10, this Mortgage shall remain in
     force and effect until the earlier of (i) all Secured Obligations have been
     paid or prepaid in full, even if this Mortgage and/or the Guaranty is
     divided or (ii) so long as the Senior Facility Loans Obligations have been
     paid or prepaid in full, the Borrower, with the consent of the Onshore
     Collateral Agent, seeks to terminate this Agreement as contemplated under
     Section 7.03 of the Peruvian Bonds Indenture. The Guaranty shall not be
     totally or partially cancelled, discharged, removed or separated from this
     Mortgage, until all of the Secured Obligations have been paid or prepaid in
     full by the Borrower (in the case of clause (i)) or the Onshore Collateral
     Agent so consents (in the case of clause (ii)).

6.3  Notwithstanding the foregoing and subject to Section 11.2, it is agreed
     that any of the Real Property shall be released from the Mortgage to the
     extent that the Borrower disposes of any such Real Property in accordance
     with the terms of Section 7.07 of the Master Participation Agreement.

7.   OBLIGATIONS OF THE BORROWER

7.1  The Borrower hereby undertakes the following:

     (a)  To take all actions and issue and deliver all private and public
          documents that may be required in order to formalize, perfect,
          maintain and/or foreclose the Guaranty;

     (b)  To file the public deed resulting from this Agreement for recordation
          before the applicable Public Registry within ten (10) Business Days
          following the execution of such public deed by all of the Parties and
          obtain the registration thereof in such applicable Public Registry
          within ninety (90) days following the execution; provided that so long
          as the Borrower is exercising commercially reasonable efforts to
          obtain the registration, such ninety (90) days period shall be
          extended to one hundred and eighty (180) days. For any and all
          Updates, the Borrower hereby undertakes to file the respective public
          deeds for recordation before the applicable Public Registry within ten
          (10) Business Days following the execution of such public deed by all
          of the


                                                                               6

          Parties and obtain the registration thereof in such applicable Public
          Registry within ninety (90) days following the execution; provided
          that so long as the Borrower is exercising commercially reasonable
          efforts to obtain the registration, such ninety (90) days period shall
          be extended to one hundred and eighty (180) days;

     (c)  To pay all applicable taxes, expenses and any other obligation,
          including license fees and penalties, applicable to the Guaranty;

     (d)  To comply with the obligation provided under Section 5.3; and

     (e)  To pay all reasonable expenses such as notarial and registration fees
          in connection with this Mortgage, the Updates, and any modification or
          amendment to this Agreement.

8.   REPRESENTATIONS AND WARRANTIES

8.1  As of the date hereof, the Borrower makes the following representations and
     warranties to the Onshore Collateral Agent:

     (a)  It is the sole and exclusive owner of or has legal title to the Real
          Property and therefore it has the full right, power and authority to
          enter into this Agreement without violating any contractual, legal, or
          other obligation to any entity or person;

     (b)  Upon registration, this Mortgage will create a first and preferential
          ranking mortgage over the Real Property ; and

     (c)  The Real Property is in good standing, free from any lien and
          encumbrance other than this Mortgage and are not subject to any
          judicial or extra-judicial measure that in any way may limit its free
          ownership and availability.

9.   FORECLOSURE OF THE GUARANTY

9.1  Foreclosure and enforcement of the Guaranty shall only be made in
     accordance with the terms of the Master Security Agreement and this Section
     9.

9.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take Borrower Enforcement Action with respect to
     the Guaranty pursuant to the terms of the Master Security Agreement, the
     Onshore Collateral shall have the right to proceed to foreclose upon the
     Guaranty. Such foreclosure upon the Guaranty shall take place in accordance
     with the following procedure:


                                                                               7

     (a)  Judicial Action ("ejecucion judicial")

          The Guaranty shall only be foreclosed in whole or in part through a
          judicial procedure in accordance with Article 720 et seq. of the Code
          of Civil Procedure, before the judges of the judicial district of
          Arequipa - Cercado.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

     (b)  Assessment of the Guaranty

          Subject to the following paragraph, for all purposes concerning the
          enforcement of the Guaranty, the aggregate value of the Real Property
          is US$ _____, and the value of each item of Real Property is the
          amount set forth on Exhibit 1 next to each such item; provided that
          such values shall be reviewed and adjusted in order to reflect the
          cost of any and all new Real Property incorporated into under this
          Mortgage as described in Section 5.3 of this Mortgage.

          Upon a Borrower Event of Default and while it is Continuing, the
          Onshore Collateral Agent shall have the right to request an appraisal
          of the Guaranty, which appraisal shall be performed by any one of the
          pre-approved appraisers listed in Exhibit 2 or any other appraiser
          agreed to by the Parties, in which case for all purposes concerning
          the enforcement of the Guaranty the aggregate value of the Real
          Property shall be the aggregate value thereof as determined by such
          appraiser in such appraisal.

          The equivalent of 2/3 of the above-mentioned amount (as amended or
          appraised) shall serve as the basic value of the Real Property for the
          first auction undertaken within the a foreclosure proceeding pursuant
          to this Section 9, subsequently reducing said value, according to law,
          for any subsequent auction, as the case may be.

9.3  The Borrower hereby waives its right to make any claim in connection with
     the foreclosure of the Guaranty against the Onshore Collateral Agent to the
     extent that the Onshore Collateral Agent fully complies with the procedure
     for foreclosure set forth in this Section 9 and the relevant provisions of
     the Master Security Agreement.

10.  OBLIGATION OF THE ONSHORE COLLATERAL AGENT

The Onshore Collateral Agent hereby covenants and agrees to promptly release the
Mortgage over the Real Property, and to take all actions necessary to formalize
such


                                                                               8

release, in the event that [(i) prior to the occurrence of the Closing Date
and prior to the issuance of any Peruvian Bonds, the Borrower terminates and
reduces all Commitments to zero, or (ii)] this Mortgage no longer remains in
full force and effect as provided in Section 6.2.

11.  ASSIGNMENT AND RELEASE OF THE MORTGAGE

11.1 The Borrower hereby expressly grants its prior written consent, in
     accordance with Article 1435 of the Civil Code, to the assignment of this
     Agreement ("cesion de posicion contractual") by the Onshore Collateral
     Agent to any successor or assign of the Onshore Collateral Agent appointed
     by the Senior Lenders pursuant to the Master Security Agreement.

11.2 The release of the Mortgage requires express and written confirmation by
     the Onshore Collateral Agent and must be formalized by means of a public
     deed recorded with the applicable Public Registry. Subject to Section 10,
     the Onshore Collateral Agent hereby undertakes, promptly upon the
     Borrower's request if pursuant to Section 6.3, to execute and deliver any
     and all documents and public deed that may be required to formalize such
     release at the cost of the Borrower.

12.  PROCEEDS OF THE FORECLOSURE OF THE GUARANTY

In the event that the Guaranty is foreclosed upon in accordance with Section 9,
the proceeds of such foreclosure shall be allocated in accordance with the
applicable rules under the Code of Civil Procedure and in accordance with the
order of priority and terms set forth in Section 4.18 of the Master Security
Agreement. Once the Secured Obligations have been paid or prepaid in full, any
balance of the proceeds of the sale of the Guaranty shall be paid and delivered
to the Borrower.

13.  NOTICES

Any notice, request, demand, consent, designation, direction, instruction,
certificate and other required communications to be given hereunder between the
Parties shall be in writing and shall be addressed, respectively, as follows, or
to such other address as may be hereafter furnished for this purpose by such
Party:


                                                                               9

     If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          [Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager
          Facsimile: (51-54) 283-376]

          with a copy to:

          Phelps Dodge Corporation
          [One N. Central Avenue
          Phoenix, Arizona  85004
          United States of America
          Attention: _____________
          Facsimile: _____________]

     If to the Onshore Collateral Agent, at:

          [Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040]

14.  GOVERNING LAW AND JURISDICTION

14.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

14.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, enforcement
     or interpretation of this Agreement shall be resolved before the judges of
     the judicial district of Arequipa - Cercado; provided that the Parties
     agree that any disputes arising out of or in connection with the terms of
     the Master Security Agreement shall not be resolved as set forth in this
     Section 14.2 but will be resolved pursuant to the terms of the Master
     Security Agreement.


                                                                              10

15.  SEVERABILITY

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as most nearly to retain the intent of
the Parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.

16.  AMENDMENTS

Neither this Agreement nor any terms hereof may be amended, supplemented or
modified other than pursuant to a written instrument executed by (i) the
Borrower and (ii) the Onshore Collateral Agent.

Mr. Notary, please add the pertinent introduction and conclusion as required by
law and forward the corresponding notices to the Public Registry for the
recording of this Agreement.

                                                                     Lima, _____

SOCIEDAD MINERA CERRO VERDE S.A.A.


- ----------------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- ----------------------------------
By:
Title:


                                                                              11

                                    EXHIBIT 1

                  LIST, DESCRIPTION AND VALUE OF REAL PROPERTY


                                                                              12

                                    EXHIBIT 2

                         LIST OF PRE-APPROVED APPRAISERS

Name:     Apoyo Consultoria
Address:  Calle Gonzales Larranaga 265
          San Antonio, Lima 18
          Peru
Phone:    (51-1) 213-1100
Fax:      (51-1) 241-4032

Name:     Macroconsult
Address:  Calle General Borgono 1156
          Lima 18
          Peru
Phone:    (51-1) 221-2695
Fax:      (51-1) 221-2696

Name:     Interinvest
Address:  Av. Carlos Villaran 140
          Torre A, 18th floor
          Lima 13
          Peru
Phone:    (51-1) 219-2200
Fax:      (51-1) 219-2220

Name:     Enfoca - Gestion Empresarial
Address:  Los Pinos 222
          Lima 27
          Peru

Phone:    (51-1) 222-0808
Fax:      _______________

Name:     Alonso y Asociados
Address:  Av. Republica de Panama 3030
          Of. 701
          Lima 27
          Peru

Phone:    (51-1) 463-1818 and (51-1) 463-5616
Fax:      ______________


                                                                              13

                                           EXHIBIT I - Form of prenda industrial

TO THE NOTARY PUBLIC:

Kindly issue in your Registry of Public Deeds one for this INDUSTRIAL PLEDGE
AGREEMENT entered into by and among:

(1)  SOCIEDAD MINERA CERRO VERDE S.A.A., a company incorporated and existing
     under the laws of Peru, with Taxpayer Registry No. 20170072465, duly
     represented by _____, identified with _____ No. _____, as per power of
     attorney registered in Entry Card _____ of File No. _____ of the Public
     Registry of Companies for Lima (the "Borrower"); and

(2)  [CITIBANK DEL PERU S.A.], a bank incorporated and existing under the laws
     of Peru, with Taxpayer Registry No. _____, duly represented by _____,
     identified with _____ No. _____, as per power of attorney registered in
     Entry Card _____ of File No. _____ of the Public Registry of Companies for
     Lima (together with its successors and assigns, the "Onshore Collateral
     Agent").

This instrument is executed under the terms and conditions stated below:

1.   PREAMBLE

1.1  The Borrower has legal title over certain mining concessions granted by the
     pertinent Peruvian Governmental Authorities, for the operation of the Cerro
     Verde copper mine, including a copper leaching and solution
     extraction/electrowinning (SX/EW) operation, located in the Districts of
     Uchumayo and Yarabamba, Province of Arequipa, Peru.

1.2  The board of directors of the Borrower has approved the development of a
     primary sulfide ore body beneath the oxide ore body currently in production
     (the "Sulfide Project"), for which purposes the Borrower [intends to
     obtain] / [has obtained] financing in an approximate amount of Four Hundred
     and Fifty Million Dollars of the United States of America (US$
     450,000,000.00).

1.3  The Borrower has entered into a Master Participation Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, and the Administrative Agent in order to
     set forth the general financing arrangement for the Sulfide Project.

1.4  The Borrower has entered into: (i) the JBIC Loan Agreement with JBIC; (ii)
     the KfW Loan Agreement with KfW; and (iii) the Commercial Banks Loan
     Agreement with the Commercial Banks, which establish the commitment to lend
     to the Borrower undertaken by each of these financial institutions in
     accordance with the Master Participation Agreement.

1.5  The Borrower [intends to issue] / [has issued] the Peruvian Bonds in the
     Peruvian market through a bond program in order to complete the financing
     that it requires for the development of the Sulfide Project.

1.6  The Borrower has entered into a Master Security Agreement among the
     Borrower, the Senior Facility Lenders, the Lead JBIC Arrangers, the Global
     Coordinators, the Lead Arrangers, the Administrative Agent, the Trustee,
     the Offshore Collateral Agent and the Onshore Collateral Agent in order to
     set forth, among other things, the terms of the security interests to be
     granted by the Borrower in favor of the Onshore Collateral Agent, who acts
     for the benefit and on behalf of the Secured Parties, to secure the timely
     and full payment or prepayment by the Borrower of the Secured Obligations.
     The Senior Lenders have appointed [Citibank del Peru S.A.] as Onshore
     Collateral Agent in the [Master Security Agreement]. [The intent of the
     parties to the Master Security Agreement is that, prior] / [Prior] to the
     first issuance of the Peruvian Bonds, the Common Representative [will
     enter] / [entered] into a New Party Accession Agreement and thereupon the
     Peruvian Bondholders acting through the Common Representative [will,
     collectively, have] / [had, collectively,] all of the rights and
     obligations of a Senior Lender under the Master Security Agreement,
     including, without limitation, the right of the Common Representative, on
     behalf of the Peruvian Bondholders, to benefit as a Senior Lender from the
     security to be granted by the Borrower to the Secured Parties pursuant to
     the Master Security Agreement and the other Security Documents, including,
     without limitation, the security interest created by this Agreement.

1.7  Pursuant to the Master Security Agreement, the Borrower has undertaken to
     secure the Secured Obligations by granting an industrial pledge over
     certain Goods and Assets permanently used in connection with the industrial
     activities of the Borrower outside the boundaries of the Core Mining
     Concessions as of the date hereof.

1.8  The Borrower and the Onshore Collateral Agent have entered into this
     Agreement for the purpose of creating an industrial pledge over the Goods
     and Assets in favor of the Onshore Collateral Agent, for the benefit and on
     behalf of the Secured Parties.

2.   INTERPRETATION

2.1  The Exhibits hereto form part of this Agreement and shall have the same
     force and effect as if set out in the body of this Agreement and any
     reference to this Agreement shall include the Exhibits hereto.

2.2  Unless the context shall otherwise require, or unless otherwise defined
     herein, all capitalized terms used herein shall have the meaning assigned
     to them in Schedule Z to the Master Security Agreement which is
     incorporated herein by reference.


                                                                               2

     In addition, for the exclusive purpose of this Agreement, the following
     capitalized words and expressions shall have the meanings set forth below:

          "Agreement": means this Industrial Pledge Agreement.

          "Business Day": means a day (other than a Saturday or a Sunday) on
     which banks are open for business in Lima, Peru.

          "Civil Code": means the Civil Code approved by Legislative Decree 295,
     as amended.

          "Code of Civil Procedure": means the General Revised Text of the Code
     of Civil Procedure approved by Legislative Decree 768, as amended.

          "Core Mining Concessions": means, collectively, the Cerro Verde Mining
     Concession 1, 2, 3, the Beneficiation Concession, Tiabaya 4 and Tiabaya 10
     (as described in further detail on Exhibit 1 attached hereto).

          "General Industries Law": means Law No. 23407, as amended.

          "Goods and Assets": has the meaning set forth in Section 5.1.

          "Guaranty": means all Goods and Assets as well as all rights to
     insurance and expropriation compensations without any limitation that the
     Borrower may be entitled to for any loss, destruction, deterioration or
     expropriation of any of the foregoing.

          "Industrial Pledge": has the meaning set forth in Section 3.1.

          "Lien's Amount": has the meaning set forth in Section 4.1.

          "Parties": means the parties to this Agreement; and "Party" means any
     one of them.

          "Update": has the meaning set forth in Section 5.3.

3.   PURPOSE AND TERM OF THE INDUSTRIAL PLEDGE

3.1  Pursuant to Article 82 et seq. of the General Industries Law and Articles
     1055 and 1057 of the Civil Code, the Borrower, as the sole and exclusive
     owner of the Goods and Assets, hereby grants a first and preferential
     ranking industrial pledge (the "Industrial Pledge") over any and all of the
     Goods and Assets in favor of the Onshore Collateral Agent, for the benefit
     and on behalf of the Secured Parties, as


                                                                               3

     security for the timely and full payment or prepayment by the Borrower of
     the Secured Obligations.

3.2  This Industrial Pledge secures the Secured Obligations of the Borrower with
     the Secured Parties on a pari passu basis. Accordingly, all Secured Parties
     shall share on the security interest created herein as well as on any and
     all proceeds resulting from the enforcement thereof as contemplated in
     Section 12.

3.3  The Onshore Collateral Agent shall be the only party entitled to exercise
     any and all rights and prerogatives hereunder, including without limitation
     any Borrower Enforcement Action, and shall exercise such rights and
     prerogatives solely in accordance with the provisions of this Agreement and
     the Master Security Agreement.

4.   LIEN'S AMOUNT

4.1  The Parties hereby agree that the amount of the lien created by this
     Industrial Pledge is the total amount of the Secured Obligations, which
     principal amount is an amount not to exceed [Four Hundred and Fifty Million
     Dollars of the United States of America (US$ 450,000,000.00)], plus all
     applicable interest, expenses and fees as well as any and all costs and
     expenses ("costas y costos") in the event that the foreclosure of the
     Guaranty is necessary (the "Lien's Amount").

4.2  The Parties hereby agree that:

     (a)  the total amount secured by this Industrial Pledge shall include any
          amount which may be payable to the Secured Parties pursuant to Section
          4.1; and

     (b)  the Lien's Amount shall not limit in any manner the exercise by the
          Onshore Collateral Agent of its rights and/or remedies pursuant to the
          terms and conditions of this Agreement and the relevant provisions of
          the Master Security Agreement.

4.3  The Borrower and the Onshore Collateral Agent may agree, from time to time,
     subject to the terms and conditions of the Master Security Agreement, to
     reduce the Lien's Amount under this Industrial Pledge in accordance with
     Articles 1083 and 1115 of the Civil Code, provided that the Lien's Amount
     resulting from such reduction fully covers its Secured Obligations.
     Accordingly, the Onshore Collateral Agent, for the benefit and on behalf of
     the Secured Parties, subject to the terms and conditions of the Master
     Security Agreement, undertakes to execute and deliver any and all documents
     and public deeds that may be required in order to reflect such reduction
     promptly upon the agreement of the Borrower and the Onshore Collateral
     Agent. The Borrower hereby waives its right under Articles 1083 and 1116 of
     the Civil Code to request any judge for the reduction of the Lien's Amount.


                                                                               4

4.4  The Borrower hereby waives its right under Article 1073 of the Civil Code
     to request any judge for the substitution of this Industrial Pledge.

5.   EXTENT OF THE INDUSTRIAL PLEDGE

5.1  This Industrial Pledge comprises, to the fullest extent permitted by law,
     each and every right and asset, which by fact or by law pertains to the
     equipment, machinery and movable assets owned by the Borrower and used by
     the Borrower in connection with its industrial activities outside the
     boundaries of the Core Mining Concessions (as identified on Exhibit 1
     hereto, as may be amended from time to time, the "Goods and Assets"), and
     all insurance and expropriation compensations that the Borrower may be
     entitled to for any loss, destruction, deterioration or expropriation of
     any of the foregoing; provided that the goods and assets comprising this
     Industrial Pledge shall not include those goods and assets that are pledged
     or mortgaged by the Borrower to the Onshore Collateral Agent, for the
     benefit and on behalf of the Secured Parties, pursuant to the Mining Pledge
     Agreement, dated _____, or the Mining Mortgage Agreement, dated _____,
     respectively.

5.2  The Parties hereby agree and acknowledge that only equipment, machinery and
     movable assets owned or to be owned by the Borrower that have an individual
     book value equal to or in excess of One Million Dollars of the United
     States of America (US$ 1,000,000.00) are or, as the case may be, will be
     listed on Exhibit 2 and included in this Industrial Pledge. The Parties
     hereby further agree that all such Goods and Assets shall remain in
     possession of the Borrower until the Borrower has received a Borrower
     Enforcement Direction with respect to the Guaranty pursuant to the terms of
     the Master Security Agreement.

5.3  Pursuant to the terms of the Master Security Agreement, the Borrower has
     agreed to amend this Industrial Pledge, from time to time before this
     Agreement is terminated pursuant to Section 6.2, by way of updating Exhibit
     2. Accordingly, the Borrower hereby undertakes to execute any and all
     documents and public deeds (each, an "Update") necessary to modify and
     include as part of Exhibit 2, along with all of the Goods and Assets
     already listed therein, a description of all Goods and Assets acquired by
     the Borrower which have an individual book value equal to or in excess of
     One Million Dollars of the United States of America (US$ 1,000,000.00),
     from the time Exhibit 2 was last modified, amended or restated; provided
     that the Borrower shall only be required to perform the periodic amendment
     obligations described in this Section 5.3 if any modification is produced
     and if at any time the aggregate book value of the Goods and Assets with an
     individual book value equal to or in excess of One Million Dollars of the
     United States of America (US$ 1,000,000.00) exceeds Ten Million Dollars of
     the United States of America (US$ 10,000,000.00).


                                                                               5

5.4  This Industrial Pledge is granted exclusively in favor of the Onshore
     Collateral Agent for the benefit and on behalf of the Secures Parties.

6.   INDIVISIBILITY OF THE GUARANTY

6.1  This Industrial Pledge and the Guaranty subject hereto (as a whole or
     considering its individual parts) are indivisible and are intended to
     secure the timely and full payment or prepayment by the Borrower of the
     Secured Obligations.

6.2  Except to the extent set forth in Section 10, this Industrial Pledge shall
     remain in force and effect until the earlier of (i) all the Secured
     Obligations have been paid or prepaid in full, even if this Industrial
     Pledge and/or the Guaranty is divided, or (ii) so long as the Senior
     Facility Loans Obligations have been paid or prepaid in full, the Borrower,
     with the consent of the Onshore Collateral Agent, seeks to terminate this
     Agreement as contemplated under Section 7.03 of the Peruvian Bonds
     Indenture. The Guaranty shall not be totally or partially cancelled,
     discharged, removed or separated from this Industrial Pledge, until all of
     the Secured Obligations have been paid or prepaid in full by the Borrower
     (in the case of clause (i)) or the Onshore Collateral Agent so consents (in
     the case of clause (ii)).

6.3  Notwithstanding the foregoing and subject to Section 11.2, it is agreed
     that any of the Goods and Assets shall be released from the Industrial
     Pledge to the extent that the Borrower disposes of any such Goods and
     Assets in accordance with the terms of Section 7.07 of the Master
     Participation Agreement.

7.   OBLIGATIONS OF THE BORROWER

7.1  The Borrower hereby undertakes the following:

     (a)  To take all actions and issue and deliver all private and public
          documents that may be required to formalize, perfect, maintain and/or
          foreclose upon the Guaranty;

     (b)  To file the public deed resulting from this Agreement for recordation
          before the applicable Public Registry within ten (10) Business Days
          following the execution of such public deed by all of the Parties and
          obtain the registration thereof in such applicable Public Registry
          within ninety (90) days following the execution; provided that so long
          as the Borrower is exercising commercially reasonable efforts to
          obtain the registration, such ninety (90) days period shall be
          extended to one hundred and eighty (180) days. For any and all
          amendments to this Industrial Pledge pursuant to Section 5.3, the
          Borrower hereby undertakes to file the respective public deeds for
          recordation before the applicable Public Registry within ten (10)
          Business


                                                                               6

          Days following the execution of such public deed by all of the Parties
          and obtain the registration thereof in such applicable Public Registry
          within ninety (90) days following the execution; provided that so long
          as the Borrower is exercising commercially reasonable efforts to
          obtain the registration, such ninety (90) days period shall be
          extended to one hundred and eighty (180) days;

     (c)  To comply with the obligations set forth in Section 5.3; and

     (d)  To pay all expenses, including, without limitation, notarial and
          registration fees in connection with this Industrial Pledge and the
          Updates and any modification and amendment to this Agreement.

8.   REPRESENTATIONS AND WARRANTIES

8.1  As of the date hereof, the Borrower makes the following representations and
     warranties to the Onshore Collateral Agent:

     (a)  It is the sole and exclusive owner of or has legal title to the Goods
          and Assets, and it has therefore full right, power, and authority to
          enter into this Agreement without violating any contractual, legal, or
          other obligation to any entity or person;

     (b)  The Goods and Assets are located outside the boundaries of the Core
          Mining Concessions and are used by the Borrower in connection with its
          industrial activities;

     (c)  Upon registration, this Industrial Pledge will create a first and
          preferential ranking industrial pledge over the Goods and Assets; and

     (d)  The Goods and Assets are free from any liens and encumbrances other
          than this Industrial Pledge and are not subject to any judicial or
          extra-judicial measure that in any way may limit its free ownership
          and availability.

9.   FORECLOSURE OF THE GUARANTY

9.1  Foreclosure and enforcement of the Guaranty shall only be made in
     accordance with the terms of the Master Security Agreement and this Section
     9.

9.2  Upon receipt by the Onshore Collateral Agent of an instruction from the
     Administrative Agent to take Borrower Enforcement Action with respect to
     the Guaranty pursuant to the terms of the Master Security Agreement, the
     Onshore Collateral Agent shall have the right to proceed to foreclose upon
     the Guaranty.


                                                                               7

     Such foreclosure upon the Guaranty shall take place in accordance with
     either of the procedures set forth in (a) and (b) below:

     (a)  Private Sale

          The Guaranty may be foreclosed upon in whole or in part through a
          direct sale or a public or private auction procedure in accordance
          with Article 1069 of the Civil Code. Such sale or auction shall be
          carried out by the Onshore Collateral Agent, acting as instructed by
          the Administrative Agent, in a commercially reasonable manner.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

          If the Guaranty is foreclosed through an auction, such auction shall
          be performed by an authorized auctioneer designated by the Onshore
          Collateral Agent. The auction may take place where the Goods and
          Assets are located or at any other place that may be determined by the
          Onshore Collateral Agent. The Onshore Collateral Agent shall provide
          no less than twenty (20) days notice in advance of such auction, which
          such notice shall include an identification of the designated
          auctioneer.

          To the extent permitted by applicable Peruvian law and the Master
          Security Agreement, the Onshore Collateral Agent shall have the right
          to bid for and purchase the Goods and Assets offered for sale at the
          auction described herein, and upon compliance with the terms of the
          sale may hold and dispose of such property.

     (b)  Judicial Action ("ejecucion judicial")

          Alternatively, the Guaranty may be foreclosed in whole or in part upon
          through a judicial procedure in accordance with Article 720 et seq. of
          the Code of Civil Procedure, before the judges of the judicial
          district of Arequipa - Cercado.

          The Onshore Collateral Agent shall be entitled to exercise any and all
          rights, prerogatives and actions permitted by this Agreement, the
          Master Security Agreement or applicable Peruvian law.

     (c)  Assessment of the Guaranty

          Subject to the following paragraph, for all purposes concerning the
          enforcement of the Guaranty, the aggregate value of the Goods and
          Assets shall be US$_____ (as more fully set forth on Exhibit 2);
          provided that such


                                                                               8

          aggregate value shall be reviewed and adjusted with the addition of
          further Goods and Assets pursuant to the amendment obligations of the
          Borrower described in Section 5.3.

          Upon a Borrower Event of Default and while it is Continuing, the
          Onshore Collateral Agent shall have the right to request an appraisal
          of the Guaranty, which appraisal shall be performed by any one of the
          pre-approved appraisers listed in Exhibit 3 or any other appraiser
          agreed to by the Parties, in which case for all purposes concerning
          the enforcement of the Guaranty the aggregate value of the Goods and
          Assets shall be the aggregate value thereof as determined by such
          appraiser in such appraisal.

          If the Guaranty is foreclosed upon through a judicial procedure as
          referred to in Section 9.2(b), the equivalent of 2/3 of the above
          mentioned amount (as amended or appraised) shall serve as the basic
          value of the Goods and Assets for the first auction undertaken within
          such foreclosure proceeding, subsequently reducing said value,
          according to law, for any subsequent auctions, as the case may be.

9.3  The Borrower hereby waives its right to make any claim in connection with
     the foreclosure upon the Guaranty against the Onshore Collateral Agent to
     the extent that the Onshore Collateral Agent fully complies with the
     procedure for foreclosure set forth in this Section 9 and the relevant
     provisions of the Master Security Agreement.

10.  OBLIGATION OF THE ONSHORE COLLATERAL AGENT

The Onshore Collateral Agent hereby covenants and agrees to promptly release
this Industrial Pledge, and to take all actions necessary to formalize such
release, in the event that [(i) prior to the occurrence of the Closing Date and
prior to the issuance of any Peruvian Bonds, the Borrower terminates and reduces
all Commitments to zero, or (ii)] this Industrial Pledge no longer remains in
full force and effect as provided in Section 6.2.

11.  ASSIGNMENT AND RELEASE OF THE INDUSTRIAL PLEDGE

11.1 The Borrower hereby expressly grants its prior written consent, in
     accordance with Article 1435 of the Civil Code, to the assignment of this
     Agreement ("cesion de posicion contractual") by the Onshore Collateral
     Agent to any successor or assign of the Onshore Collateral Agent appointed
     by the Senior Lenders pursuant to the Master Security Agreement.

11.2 The release of the Industrial Pledge requires express and written
     confirmation by the Onshore Collateral Agent, on behalf of the Secured
     Parties, and must be formalized


                                                                               9

     by means of a public deeds recorded with the applicable public registry.
     Subject to Section 10, the Onshore Collateral Agent hereby undertakes,
     promptly upon the Borrower's request if pursuant to Section 6.3, to execute
     and deliver any and all documents and public deeds that may be required to
     formalize such release at the cost of the Borrower.

12.  PROCEEDS OF THE FORECLOSURE OF THE GUARANTY

12.1 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(a), the proceeds of such foreclosure shall be allocated by the
     Onshore Collateral Agent in accordance with the order of priority and terms
     set forth in Section 4.18 of the Master Security Agreement. Once the
     Secured Obligations have been paid or prepaid in full, any balance of the
     proceeds of the sale of the Guaranty shall be paid and delivered to the
     Borrower.

12.2 In the event that the Guaranty is foreclosed upon in accordance with
     Section 9.2(b), the proceeds of such foreclosure shall be allocated in
     accordance with the applicable rules under the Code of Civil Procedure and
     in accordance with the order of priority and terms set forth in Section
     4.18 of the Master Security Agreement. Once the Secured Obligations have
     been paid or prepaid in full, any balance of the proceeds of the sale of
     the Guaranty shall be paid and delivered to the Borrower.

13.  NOTICES

Any notice, request, demand, consent, designation, direction, instruction,
certificate and other required communications to be given hereunder between the
Parties shall be in writing and shall be addressed, respectively, as follows, or
to such other address as may be hereafter furnished for this purpose by such
Party:

     If to the Borrower, at:

          Sociedad Minera Cerro Verde S.A.A.
          [Asiento Minero Cerro Verde S/N
          Uchumayo - Arequipa, Casilla Postal 299
          Peru
          Shipping: Av. Alfonso Ugarte 304
          Cercado - Arequipa
          Peru
          Attention: General Manager
          Facsimile: (51-54) 283-376]


                                                                              10

          with a copy to:

          Phelps Dodge Corporation
          [One N. Central Avenue
          Phoenix, Arizona  85004
          United States of America
          Attention: ____________
          Facsimile: ____________]

     If to the Onshore Collateral Agent, at:

          [Citibank del Peru S.A.
          Av. Canaval y Moreyra 480, 3rd floor
          San Isidro, Lima
          Peru
          Attention: Raul Denegri G., Assistant Manager
          Facsimile: (51-1) 221-5040]

14.  GOVERNING LAW AND JURISDICTION

14.1 This Agreement is governed by, and shall be construed in accordance with,
     the laws of Peru.

14.2 The Parties hereby agree that any dispute arising under, out of or in
     connection with the total or partial validity, effectiveness, enforcement
     or interpretation of this Agreement shall be resolved before the judges of
     the judicial district of Arequipa - Cercado; provided that the Parties
     agree that any disputes arising out of or in connection with the terms of
     the Master Security Agreement shall not be resolved as set forth in this
     Section 14.2 but will be resolved pursuant to the terms of the Master
     Security Agreement.

15.  SEVERABILITY

If any provision of this Agreement is or becomes invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as most nearly to retain the intent of
the Parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.


                                                                              11

16.  AMENDMENTS

Neither this Agreement nor any terms hereof may be amended, supplemented or
modified other than pursuant to a written instrument executed by (i) the
Borrower and (ii) the Onshore Collateral Agent.

Mr. Notary, please add the pertinent introduction and conclusion as required by
law and forward the corresponding notices to the Public Registry for the
recording of this Agreement.

                                                                     Lima, _____

SOCIEDAD MINERA CERRO VERDE S.A.A.


- -------------------------------------
By:
Title:


CITIBANK DEL PERU S.A.


- -------------------------------------
By:
Title:


                                                                              12

                                    EXHIBIT 1

                         LIST OF CORE MINING CONCESSIONS


                                                                              13

                                    EXHIBIT 2

                 LIST, DESCRIPTION AND VALUE OF GOODS AND ASSETS


                                                                              14

                                    EXHIBIT 3

                         LIST OF PRE-APPROVED APPRAISERS

Name:      Apoyo Consultoria
Address:   Calle Gonzales Larranaga 265
           San Antonio, Lima 18
           Peru
Phone:     (51-1) 213-1100
Fax:       (51-1) 241-4032

Name:      Macroconsult
Address:   Calle General Borgono 1156
           Lima 18
           Peru
Phone:     (51-1) 221-2695
Fax:       (51-1) 221-2696

Name:      Interinvest
Address:   Av. Carlos Villaran 140
           Torre A, 18th floor
           Lima 13
           Peru
Phone:     (51-1) 219-2200
Fax:       (51-1) 219-2220

Name:      Enfoca - Gestion Empresarial
Address:   Los Pinos 222
           Lima 27
           Peru
Phone:     (51-1) 222-0808
Fax:       ____________

Name:      Alonso y Asociados
Address:   Av. Republica de Panama 3030
           Of. 701
           Lima 27
           Peru
Phone:     (51-1) 463-1818 and (51-1) 463-5616
Fax:       ____________


                                                                              15

                                                                       EXHIBIT J

                      FORM OF NEW PARTY ACCESSION AGREEMENT

This NEW PARTY ACCESSION AGREEMENT, dated as of _____(1) (the "Agreement"), is
made among _____ (the "Acceding Party"), Calyon New York Branch, as
administrative agent for the Senior Facility Lenders (the "Administrative
Agent") and Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta
listed on the Lima Stock Exchange and organized under the laws of the Republic
of Peru (the "Borrower").

                                    RECITALS

     A. On September 30, 2005 the Borrower entered into a Master Security
Agreement among the Borrower, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, Mizuho
Corporate Bank, Ltd., Citibank, N.A. and Citibank del Peru (as amended from time
to time, the "Master Security Agreement" or "MSA").

     B. On September 30, 2005 the Borrower entered into a Completion Guarantee
among the Parent Companies, Japan Bank for International Cooperation, Sumitomo
Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, Calyon New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia and Mizuho
Corporate Bank, Ltd. (as amended from time to time, the "Completion Guarantee").

     C. On or prior to the date hereof, the Borrower, in preparation of the
first issuance of Peruvian Bonds under the Peruvian Bonds Program, has executed
a supplemental indenture.

     NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

     1.   Accession.

          a. Accession. Effective as of the date of the first issuance of
          Peruvian Bonds under the Peruvian Bonds Program (i) the Acceding
          Party, in its capacity as Common Representative, shall become a party
          to the Master Security Agreement and the Completion Guarantee and (ii)
          the Acceding Party, in its capacity as Common Representative, and the
          Peruvian Bondholders, acting through the Common Representative, shall
          have all of the rights and obligations of, respectively, the Common
          Representative and the Peruvian Bondholders specified pursuant to the
          Master Security

- ----------
(1) Note: The New Party Accession Agreement shall be executed by the Common
Representative prior to the issuance of the Peruvian Bonds, but shall become
effective only upon the issuance of the Peruvian Bonds.

          Agreement, the Completion Guarantee and any other instruments and
          documents furnished pursuant thereto, it being understood and agreed
          that the Common Representative and Peruvian Bondholders shall be
          subject to, inter alia, the provisions relating to the exercise of
          remedies and voting thresholds set forth in the Master Security
          Agreement.

          b. Compliance. This accession to the Master Security Agreement and the
          Completion Guarantee is made pursuant to and in accordance with
          Section 2.02(b) of the MPA (as defined in clause 6 below), Section
          9.01(a) of the MSA and Section 9.02(a) of the Completion Guarantee.

     2.   Additional Actions of Acceding Party. As of the date hereof and as of
          the date of the first issuance of Peruvian Bonds under the Peruvian
          Bonds Program, the Acceding Party (a) represents and warrants that (i)
          it has full power and authority to execute and deliver this Agreement
          and that this Agreement has been duly authorized, executed and
          delivered by it and constitutes a valid and legally binding agreement,
          enforceable in accordance with its terms and (ii) there is no
          provision of law, statute, regulation, rule, order, injunction,
          decree, writ or judgment, no provision of its organizational documents
          and no provision of any mortgage, indenture, contract or agreement
          binding on it or affecting its properties, which would prohibit,
          conflict with or in any way prevent its execution, delivery, or
          performance of the terms of this Agreement; (b) appoints and
          authorizes the Administrative Agent, the Trustee, the Onshore
          Collateral Agent and the Offshore Collateral Agent (the "Agents"),
          pursuant to and in accordance with Article VI of the MSA, to take such
          actions as agents on its behalf and to exercise such powers under the
          Master Security Agreement, the Completion Guarantee or any other
          instruments and documents furnished pursuant thereto as are delegated
          to the Agents by the terms thereof, in each case, together with such
          powers as are incidental thereto and (c) agrees that it will be bound
          by the provisions of, and will perform in accordance with their terms
          all of the obligations which by the terms of the Master Security
          Agreement and the Completion Guarantee or any other instrument or
          document furnished pursuant thereto are required to be performed by it
          as Common Representative, on behalf of the Peruvian Bondholders (it
          being understood that the Peruvian Bondholders shall collectively
          count as only one Senior Lender and shall act through the Common
          Representative).

     3.   Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY THE
          LAW OF THE STATE OF NEW YORK.

     4.   Counterparts. This Agreement may be executed in any number of
          counterparts, each of which shall be deemed to be an original and
          shall be binding upon all parties hereto, and their successors and
          assigns.


                                        2

     5.   Severability. If any provision of this Agreement shall be held to be
          invalid, illegal or unenforceable, the validity, legality and
          enforceability of the remaining provisions in such jurisdiction and
          the validity, legality and enforceability of such provision in any
          other jurisdiction shall not in any way be affected or impaired.

     6.   Definitions. Capitalized terms used but not defined herein shall have
          the meanings assigned to them in Schedule Z to the Master Security
          Agreement.

     7.   Any notice, request, demand, consent, designation, direction,
          instruction, certificate, report or other communication to be given
          hereunder shall be given in the English language and will be duly
          given when delivered in writing or sent by electronic mail confirmed
          by facsimile transmission (with written confirmation of receipt, which
          confirmation may be by facsimile transmission) (provided that a notice
          sent by electronic mail shall be duly given only at the time the
          facsimile transmission confirming the same is sent) or facsimile
          transmission (with written confirmation of receipt, which confirmation
          may be by facsimile transmission) to a party at its address and
          facsimile transmission numbers as indicated below or to such other
          address as may be furnished for this purpose by such party (any such
          communication that is not in writing shall be confirmed in writing)

               If to the Acceding Party, at

               Attention:
               Telephone:
               Facsimile:

               If to the Administrative Agent at

               CALYON New York Branch
               1301 Avenue of the Americas
               New York, New York 10019
               Attention: Ted Vandermel
               Telephone: (212) 261-7888
               Facsimile: (212) 261-3421

               If to the Borrower, at

               c/o Asiento Minero Cerro Verde
               Uchumayo (Arequipa/Peru), Casilla Postal #299
               Shipping: Av. Alfonso Ugarte #304
               Cercado, Arequipa, Republic of Peru
               Attention: General Manager
               Telephone: (054) 283-363
               Facsimile: (054) 283-376


                                        3

               with a copy to PDC, at

               Phelps Dodge Tower
               1 North Central Avenue
               Phoenix, Arizona  85004
               U.S.A.
               Attention: Treasurer
               Telephone: (602) 366-8100
               Facsimile: (602) 366-8150

                             [SIGNATURES TO FOLLOW]


                                        4

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above stated.

                                        [ACCEDING PARTY], in its capacity as
                                        Common Representative


                                        By
                                           -------------------------------------
                                          Name:
                                          Title:

SOCIEDAD MINERA CERRO VERDE S.A.A.,

in its capacity as Borrower


By
   -------------------------------------
  Name:
  Title:


CALYON NEW YORK BRANCH, in its capacity as Administrative Agent


By
   -------------------------------------
  Name:
  Title:


                                        5

                                                                       EXHIBIT K

                           [Name of the Issuing Bank]
                      IRREVOCABLE STANDBY LETTER OF CREDIT

Letter of Credit No.________            Issue Date: ________, 20__

LC Beneficiary:                                     Applicant:

[Name of LC Beneficiary]                            [Name of Applicant]
[Address of LC Beneficiary]                         [Address of Applicant]
Attn: __________                                    Attn:__________

Ladies and Gentlemen:

          1. [Name of Issuing Bank] (the "Issuing Bank") hereby establishes, at
the request of and for the account of [name of a parent company or its
affiliate] (the "Applicant"), in favor of [Trustee](1) (the "LC Beneficiary"),
as [the Trustee under the Master Security Agreement dated ______, among the
Borrower, the Senior Lenders, the Lead JBIC Arrangers, the Lead Arrangers, the
Global Coordinators, the Administrative Agent, the Trustee, the Offshore
Collateral Agent and the Onshore Collateral Agent, in each case, referred to
therein](2), the Issuing Bank's Irrevocable Letter of Credit No. _______________
(the "Letter of Credit"), in the amount of _____________ United States Dollars
(U.S.$_____________) (the "Maximum Credit Amount"), effective immediately and
expiring at _____ p.m., [New York City] time, on the Expiration Date (as
hereinafter defined).

          2. The Issuing Bank hereby irrevocably authorizes the LC Beneficiary
from time to time to draw on it, in accordance with the terms and conditions
hereinafter set forth, an aggregate amount not in excess of the Maximum Credit
Amount. The Issuing Bank shall make funds available to the LC Beneficiary
hereunder against presentation of a completed and duly signed certificate in the
form attached hereto as Annex A in accordance with the terms and conditions of
this Letter of Credit.

- ----------
(1) If this L/C is to be issued to cure a Completion Guarantee Acceleration
Event, the bracketed language shall be changed to "[Administrative Agent]".

(2) If this L/C is issued to cure a Completion Guarantee Acceleration Event, the
bracketed language shall be changed to "the Administrative Agent under the
Master Participation Agreement dated ____, among the Borrower, the Senior
Lenders, the Lead JBIC Arrangers, and the Administrative Agent, in each case,
referred to therein."

          3. Partial drawings are allowed under this Letter of Credit. Upon
payment by the Issuing Bank of any drawing, the Maximum Credit Amount shall be
automatically reduced by the amount so paid.

          4. Presentation of the certificate in the form of Annex A shall be
made on any Business Day at or prior to 5:00 p.m., on or prior to the Expiration
Date, at the office of __________________, Attn: __________________ .
Presentation must be made by hand, mail or courier service to such address. If
the presentation is made at such office, in compliance with the terms and
conditions of this Letter of Credit, the Issuing Bank hereby irrevocably
undertakes to honor such presentation. Payment under this Letter of Credit shall
be made on the next Business Day by wire transfer of federal funds to the
account of the LC Beneficiary at ______________, account number ______________.

          5. As used herein the following terms have the following meaning:

          "Expiration Date" shall mean the earlier of (i) the date on which the
LC Beneficiary surrenders this Letter of Credit for cancellation to the Issuing
Bank with a notice in the form of Annex B hereto and (ii) a Date that is at
least one year following the issuance of this Letter of Credit.

          "Business Day" shall mean any day on which the Issuing Bank is
generally open for business.

          6. This Letter of Credit shall be governed by the rules of the
"International Standby Practices 1998" (ISP98) or such later revision as may be
published by the International Chamber of Commerce, and, as to matters not
covered therein or matters mandatorily governed by the laws of the State of New
York, the laws of the State of New York, including without limitation, the
Uniform Commercial Code as in effect from time to time in the State of New York.

          7. Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to the Issuing Bank at __________, specifically
referring to the number of this Letter of Credit.


                                        2

          8. This Letter of Credit sets forth in full the Issuing Bank's
undertaking and such undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or agreement
referred to herein other than a drawing certificate in the form of Annex A
attached hereto and a cancellation certificate in the form of Annex B hereto,
and any such reference shall not be deemed to incorporate herein by reference
any document, instrument or agreement except for such certificates. This Letter
of Credit may not be modified or amended without the written consent of the LC
Beneficiary.

                                        [NAME OF ISSUING BANK]


                                        By
                                           -------------------------------------
                                           Name:
                                           Title:


                                        3

                                                                         Annex A
                                                             to Letter of Credit

                               DRAWING CERTIFICATE

To: [Name of the Issuing Bank]
    [Address of the Issuing Bank]

Re: Letter of Credit No. ____

          The undersigned, a duly authorized officer of [name of the LC
Beneficiary] (the "LC Beneficiary"), hereby directs you, in accordance with your
irrevocable standby letter of credit no. ________ issued by you for the account
of [Name of Applicant] in favor of [name of Trustee]/[name of Administrative
Agent](1), to make payment to the LC Beneficiary in the amount of $____________
to its account no. __________ at _________________.

          In witness whereof, the undersigned has executed and delivered this
certificate as of this __ day of __________, 20__.

                               [name of Trustee]/[name of Administrative Agent],
                               as [Trustee]/[ Administrative Agent],


                               By:
                                   ---------------------------
                               Name:
                               Title:

- ----------
(1) Apply either one as appropriate.


                                        4

                                                                         Annex B
                                                             to Letter of Credit

                            CANCELLATION CERTIFICATE

[Name of the Issuing Bank]
[Address of the Issuing Bank]
[Date]
Attention:
Ladies and Gentlemen:

     Reference is made to irrevocable standby Letter of Credit No.
______________ dated ______________ for the account of [Name of Applicant] in
favor of [name of the LC Beneficiary], issued by [name of the Issuing Bank].

     The undersigned, a duly authorized officer of the beneficiary of said
Letter of Credit, hereby surrenders the Letter of Credit for immediate
cancellation.

                               [name of Trustee]/[name of Administrative Agent],
                                      as [Trustee]/[ Administrative Agent],


                                      By
                                         ---------------------------------------
                                         Name:
                                         Title:


                                        5

                                                                       EXHIBIT L

                             INCUMBENCY CERTIFICATE

     Reference is made to Section 4.16 of the Master Security Agreement (as
amended from time to time, the "MSA"), dated as of September 30, 2005, among
Sociedad Minera Cerro Verde S.A.A., (the "Borrower"), Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Citibank, N.A. and
Citibank del Peru S.A.

     The undersigned being [INSERT TITLE] of the Borrower does hereby certify
that the following persons are duly authorized to execute and deliver, on behalf
of the Borrower, the Withdrawal Certificate and/or any directions or
instructions required or authorized by the Borrower to be given to the Trustee
for the withdrawal or transfer of moneys in accordance with Section 4.16 of the
MSA and the signatures appearing opposite their respective names below are the
true and genuine signatures or true facsimile thereof of such authorized person.



Name            Title            Signature
- -------------   --------------   -----------------
                           
[INSERT NAME]   [INSERT TITLE]   _________________

[INSERT NAME]   [INSERT TITLE]   _________________

[INSERT NAME]   [INSERT TITLE]   _________________

[INSERT NAME]   [INSERT TITLE]   _________________


IN WITNESS WHEREOF, the undersigned has executed this certificate as of this
_____ day of _____, 20__.


                                        ----------------------------------------
                                        Name: [INSERT NAME]
                                        Title: [INSERT TITLE]

                                                                       EXHIBIT M

                             INCUMBENCY CERTIFICATE

     Reference is made to Section 7.02 of the Master Security Agreement (as
amended from time to time, the "Master Security Agreement"), dated as of
September 30, 2005, among Sociedad Minera Cerro Verde S.A.A., Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Calyon New York
Branch (as Administrative Agent), Citibank, N.A.(as Trustee and Offshore
Collateral Agent) and Citibank del Peru S.A. (as Onshore Collateral Agent),
pursuant to which the Trustee shall receive an incumbency certificate from each
of its Appointing Parties and the Onshore Collateral Agent, the Offshore
Collateral Agent and the Administrative Agent shall receive an incumbency
certificate from each of its Appointing Parties. Capitalized terms used herein
but not defined herein shall have the meanings assigned to them in Schedule Z to
the Master Security Agreement.

     The undersigned being [INSERT TITLE OF PERSON REPRESENTING THE APPOINTING
PARTY] of [INSERT TITLE OF APPOINTING PARTY] does hereby certify that the
following persons are duly authorized to execute and deliver, on behalf of the
[insert title of Appointing Party], any notice, certificate, instrument, demand,
request, direction, instruction, waiver, receipt, consent or other document or
communication furnished to it under the MSA or any other Financing Document and
the signatures appearing opposite their respective names below are the true and
genuine signatures or true facsimile thereof of such authorized person.



Name            Title            Signature
- -------------   --------------   -----------------
                           
[INSERT NAME]   [INSERT TITLE]   _________________
[INSERT NAME]   [INSERT TITLE]   _________________


     IN WITNESS WHEREOF, the undersigned has executed this certificate as of
this _____ day of _____, 20__.


                                       -----------------------------------------
                                       Name: [INSERT NAME OF EXECUTING PERSON]
                                       Title: [INSERT TITLE OF EXECUTING PERSON]
                                       Name: [INSERT NAME OF APPOINTING PARTY]

                                                                       EXHIBIT N

                         FORM OF WITHDRAWAL CERTIFICATE

                                                                            Date

                                                         Instruction # CV-TA xxx

Citibank

Trustee and Collateral Agent

Fax #: xxxxxxxxxxx

Attention: Ms. Jenny Cheng

Re: Wire Transfer Instruction, Value Date zzzzzzzzz

Please be advised that we wish to make a wire transfer according to the
following instructions:

                           
Date of Transfer:             zzzzzzz

Amount of Transfer:           USD xxxxxxxx

Funds should be wired from:   Citibank N.A. [Citibank Peru]

Account Number:               yyyyyyyyyy

Funds should be wired to:     bank name

Account Number:               xxxxxxxx

ABA Number:                   yyyyyyyy

Beneficiary:                  name of beneficiary



Please confirm by fax or electronic means the execution of the requested wire
transfer. If you have any questions concerning these instructions, please
contact me as soon as possible by telephone at [CV telephone number, and
extension of accounting dept.] or by fax at [CV fax number, and extension of
accounting dept.].

Very truly yours,

[Name of SMCV representative]

Cc.   Name, company, fax number and other pertinent info for payee

                                                                     EXHIBIT O-1

================================================================================

                          FORM OF ACCEPTABLE GUARANTEE

                                      among

                               [Name of Guarantor]
                                 as a Guarantor

                                       and
                                 Citibank, N.A.
                           as a guarantee beneficiary

                              Dated as of [_____], 20__

================================================================================

                                                                         
                                    ARTICLE I

                                   DEFINITIONS

1.01   Definitions..........................................................   2
1.02   Interpretation.......................................................   2

                                   ARTICLE II

                                 THE OBLIGATION

2.01   The Obligation.......................................................   2
2.02   Obligations Unconditional............................................   3
2.03   Pari passu...........................................................   3

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

3.01   Representations and Warranties.......................................   4

                                   ARTICLE IV

                                  MISCELLANEOUS

4.01   Effectiveness........................................................   4
4.02   GOVERNING LAW........................................................   5
4.03   Entire Agreement.....................................................   5
4.04   Severability.........................................................   5
4.05   Amendments, etc......................................................   5
4.06   Benefit, Successors and Assigns......................................   5
4.07   Notices..............................................................   5
4.08   Execution in Counterparts............................................   5
4.09   Consent to Jurisdiction..............................................   6
4.10   No Trial by Jury.....................................................   6
4.11   No Immunity..........................................................   7



                              ACCEPTABLE GUARANTEE

     This ACCEPTABLE GUARANTEE, dated as of ____________, 20__ (as amended,
documented or otherwise modified from time to time, this "Guarantee"), is made
and entered between [Name of guarantor], a [____________] organized under the
laws of [_________________] (the "Guarantor"), and Citibank, N.A., a national
banking association organized under the laws of the United States of America, as
Trustee on behalf and for the benefit of the Senior Lenders.

                                    WHEREAS:

     A. The Borrower has entered into certain Financing Documents with the
Senior Lenders pursuant to which the Senior Lenders have agreed to extend the
Senior Loans to the Borrower and the Borrower has agreed to repay such Senior
Loans;

     B. Pursuant to the Master Security Agreement among the Borrower, the Senior
Lenders, the Lead JBIC Arrangers, the Global Coordinators, the Lead Arrangers,
the Administrative Agent, the Trustee, the Offshore Collateral Agent and the
Onshore Collateral Agent dated as of September 30, 2005 (the "Master Security
Agreement"), the Trustee has agreed to establish and maintain certain accounts
for the sole purpose of making payments therefrom in accordance with that Master
Security Agreement, including the payment of Restricted Payments;

     C. Under the Master Security Agreement, any distribution of Restricted
Payments from the Senior Debt Service Reserve Sub-Account, the Extraordinary
Major Maintenance Reserve Sub-Account, the Tax Contingency Reserve Sub-Account,
the Power Generator Reserve Sub-Account or the Restricted Payment Sub-Account,
is subject to the Trustee's prior receipt of an Acceptable Credit Support
Instrument in favor of the Trustee with respect to the Borrower's obligations to
fund such accounts;

     D. The Borrower has requested that the Trustee make a Restricted Payment
from [____________] Sub-Account in the amount of [_________]; and

     E. The Guarantor wishes to provide an Acceptable Credit Support Instrument
in satisfaction of the Master Security Agreement with respect to such Restricted
Payment.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor and the Trustee
agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein below, capitalized terms used herein shall have the
meanings assigned to them in Schedule Z to the Master Security Agreement.

     "Guarantee Expiration Date": the date that is [____________] days after the
Guarantee Effective Date.

     "Guarantee Termination Date": the meaning given in Section 2.01(d) hereof.

     "Guaranteed Account": the meaning given in Section 2.01(a) hereof.

     "Obligation": the meaning given in Section 2.01(a) hereof.

     1.02 Interpretation. The rules of interpretation as set forth in Section
1.02 of the MPA are incorporated by reference as if set forth at length herein.

                                   ARTICLE II

                                 THE OBLIGATION

     2.01 The Obligation.

     (a) The Guarantor unconditionally and irrevocably undertakes to, and shall,
pay to the Trustee on demand, in full U.S. $[__], the amount being equal to the
amount of the Restricted Payment that the Borrower has requested the Trustee to
transfer from the [__________] Sub-Account (the "Guaranteed Account") in
accordance with the provisions of Article IV of the Master Security Agreement
(the "Obligation").

     (b) This Guarantee is an Acceptable Credit Support Instrument under the
Master Security Agreement with respect to the Guaranteed Account.

     (c) This Guarantee is drawable upon demand by the Trustee in accordance
with the provisions of Section 4.19 of the Master Security Agreement.

     (d) This Guarantee, and all obligations of the Guarantor hereunder, shall
terminate on the later of (i) the Guarantee Expiration Date, or (ii) the earlier
of (x) the date on which the Master Security Agreement terminates pursuant to
its own term, (y) the date the obligations guaranteed hereunder have otherwise
been satisfied in favor or on behalf of the Borrower by cash deposits into the
Guaranteed Account or by the provision of one or more Acceptable Credit Support
Instruments in substitution of this Guarantee, or (z) the date the Trustee
returns this Guarantee to the Borrower pursuant to the


                                        2

provisions of Section 4.19(c) of the Master Security Agreement ("Guarantee
Termination Date").

     2.02 Obligations Unconditional.

     (a) The obligations of the Guarantor under Section 2.01 are absolute and
unconditional irrespective of the value, validity, regularity or enforceability
of the Financing Documents, and, to the fullest extent permitted by applicable
law, irrespective of

          (i) the absence of any action to enforce the Obligations against the
     Borrower;

          (ii) any amendment, waiver or consent by the Trustee with respect to
     any provision of this Guarantee or any Financing Document;

          (iii) the recovery of any judgment against the Borrower or any action
     to enforce the same;

          (iv) the insolvency or bankruptcy of the Borrower;

          (v) the invalidation of unenforceability of the Obligations; or

          (vi) any other circumstance which might otherwise constitute a legal
     or equitable discharge or defense of a guarantor or surety.

     (b) The Guarantor agrees that the Trustee may at any time and from time to
time, either before or after the maturity thereof, without notice to or further
consent of the Guarantor, extend the time of payment of, exchange or surrender
or fail to act hereunder or under any other agreement to perfect collateral for,
or renew any of the Obligations owed to it, and may also make any agreement with
the Borrower, for the extension, renewal, payment, compromise, discharge or
release thereof, in whole or in part, or for any modification of the terms
thereof or of any agreement between the Trustee and the Borrower, without in any
way impairing or affecting its obligations pursuant hereto.

     (c) The Guarantor hereby unconditionally and irrevocably waives diligence,
presentment, demand and any and all notices whatsoever in respect of the
Obligations and this Guarantee, and any requirement that the Trustee exhaust any
right, power or remedy or proceed against the Borrower under the Financing
Documents.

     2.03 Pari passu.

     (a) The obligations of the Guarantor under this Guarantee rank pari passu
with all other unsecured indebtedness of the Guarantor.


                                        3

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     3.01 Representations and Warranties. The Guarantor represents and warrants
to the Trustee that as of the date of this Guarantee:

     (a) Organization. It is a corporation duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its incorporation
referred to in the recital of the parties at the beginning of this Guarantee.

     (b) Authority. It has full power and authority to execute and deliver this
Guarantee and to perform its obligations hereunder in accordance with the terms
provided herein.

     (c) Binding Agreement. This Guarantee has been duly authorized, executed
and delivered by it and constitutes a valid and legally binding agreement,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.

     (d) Consents and Approvals for this Agreement. All Governmental Approvals
which are necessary for the execution and delivery by it of this Guarantee and
the performance of its obligations hereunder have been obtained and are in full
force and effect.

     (e) Conflicts. There is no provision of law, statute, regulation, rule,
order, injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Guarantee.

     (f) Non-Recourse to Borrower. The Borrower is not liable, directly or
indirectly, for any reimbursement obligations to the Guarantor or any other
Person (other than if such reimbursement obligation is a Subordinated Loan) as a
result of a drawing under this Guarantee.

                                   ARTICLE IV

                                  MISCELLANEOUS

     4.01 Effectiveness. This Guarantee shall come into full force and effect
upon its execution and delivery by each of the parties named on the signature
pages hereof.


                                        4

     4.02 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     4.03 Entire Agreement. This Guarantee constitutes the entire agreement and
understanding, and supersedes all prior agreements and understandings (both
written and oral), between the Guarantor and the Trustee with respect to the
guaranty of Obligations and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof
except as specifically set forth herein.

     4.04 Severability. If any provision of this Guarantee shall be invalid,
illegal or unenforceable, the parties hereto agree to the fullest extent they
may effectively do so that the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

     4.05 Amendments, etc. The terms of this Guarantee may be waived, altered or
supplemented only by an instrument in writing duly executed by the parties
hereto.

     4.06 Benefit, Successors and Assigns. This Guarantee is for the benefit of
the Trustee, acting on behalf of the Senior Lenders, and not for the benefit of
any other Person. This Guarantee shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee.

     4.07 Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such party (any such communication that is
not in writing shall be confirmed in writing), provided that any notice,
request, demand, consent, designation, direction, instruction, certificate,
report or other communication sent to the Trustee shall be deemed effective upon
actual receipt thereof:

     If to the Guarantor, at:

          [Contact information of the Guarantor]

     If to the Trustee, at:

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street


                                        5

          14th Floor
          New York, NY 10013
          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

     4.08 Execution in Counterparts. This Guarantee may be executed in two
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.

     4.09 Consent to Jurisdiction.

     (a) The Guarantor hereby irrevocably consents and agrees, for the benefit
of the Trustee, that any legal action, suit or proceeding against it with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Guarantee may be brought in any Federal or State
court located in New York County in the City of New York and hereby irrevocably
accepts and submits to the non-exclusive jurisdiction of such court with respect
to any such action, suit or proceeding. Each party hereto hereby waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions, suits or proceedings brought in any such court and hereby
further waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum.

     (b) The Guarantor hereby irrevocably appoints CT Corporation in New York,
NY, as its authorized agent on which any and all legal process may be served in
any such action, suit or proceeding brought in any Federal or State court
located in New York County in the City of New York. The Guarantor agrees that
service of process in respect of it upon such agent, together with written
notice of such service given to it in the manner provided in Section 4.07
hereof, shall be deemed to be effective service of process upon it in any such
action, suit or proceeding. The Guarantor agrees that the failure of such agent
to give notice to it of any such service shall not impair or affect the validity
of such service or any judgment rendered in any action, suit or proceeding based
thereon. If for any reason such agent shall cease to be available to act as
such, the Guarantor agrees to designate a new agent in New York County in the
City of New York, on the terms and for the purposes of this Section 4.09.
Nothing herein shall be deemed to limit the ability of the Administrative Agent
or any Senior Facility Lender to serve any such legal process in any other
manner permitted by applicable law or to obtain jurisdiction over the Guarantor
or bring actions, suits or proceedings against them in such other jurisdictions,
and in such manner, as may be permitted by applicable law.

     4.10 No Trial by Jury. Each party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Guarantee or the transactions
contemplated hereby.


                                        6

     4.11 No Immunity. To the extent that any party has or hereafter may acquire
any immunity (sovereign or otherwise), from any legal action, suit or
proceedings, from jurisdiction of any court or from set-off or any legal process
(whether service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to
itself or any of its property, such party hereby irrevocably waives and agrees
not to plead or claim such immunity in respect of its obligations under this
Guarantee or the subject matter hereof (including, without limitation, any
obligation for the payment of money). The parties hereby agree that the waivers
set forth in this Section 4.11 shall have the fullest effect permitted under the
Foreign Sovereign Immunities Act of 1976 of the United States, as amended, and
are intended to be irrevocable and not subject to withdrawal for purposes of
such Act. The foregoing waiver shall constitute a present waiver of immunity at
any time that any action is initiated against such party with respect to this
Guarantee.

                             [SIGNATURES TO FOLLOW]


                                        7

     IN WITNESS WHEREOF, the parties have caused this Guarantee to be duly
executed as of the date first above written.

                                        [GUARANTOR]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        CITIBANK N.A., as Trustee


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        8

                                                                     EXHIBIT O-2

================================================================================

                                    GUARANTEE

           [WITH RESPECT TO COMPLETION GUARANTEE ACCELERATION EVENTS]

                                      among

                               [Name of Guarantor]
                                 as a Guarantor

                                       and

                             CALYON New York Branch
                           as a guarantee beneficiary

                              Dated as of [______], 20__

================================================================================

                                                                            
                                    ARTICLE I

                                   DEFINITIONS

1.01   Definitions.............................................................   1
1.02   Interpretation..........................................................   2

                                   ARTICLE II

                                  THE GUARANTEE

2.01   The Guarantee...........................................................   2
2.02   Subrogation.............................................................   2
2.03   Obligations Unconditional...............................................   2
2.04   Pari passu..............................................................   3

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

3.01   Representations and Warranties..........................................   3

                                   ARTICLE IV

                                  MISCELLANEOUS

4.01   Effectiveness...........................................................   4
4.02   GOVERNING LAW...........................................................   4
4.03   Entire Agreement........................................................   4
4.04   Severability............................................................   4
4.05   Amendments, etc.........................................................   5
4.06   Benefit, Successors and Assigns.........................................   5
4.07   Notices.................................................................   5
4.08   Execution in Counterparts...............................................   5
4.09   Consent to Jurisdiction.................................................   5
4.10   No Trial by Jury........................................................   6
4.11   No Immunity.............................................................   6



                                    GUARANTEE

     This GUARANTEE, dated as of ____________, 20__ (this "Guarantee"), is made
and entered between [Parent Company providing guarantee], a
[_____________________] organized under the laws of [__________________] (the
"Guarantor"), and CALYON New York Branch, a licensed branch of a banking
corporation organized and existing under the laws of the French Republic, as
Administrative Agent on behalf and for the benefit of the Senior Facility
Lenders (the "Administrative Agent").

                                    WHEREAS:

     A. The Parent Companies have entered into the Completion Guarantee under
which the Parent Companies guarantee certain obligations of the Borrower under
the Financing Documents;

     B. Pursuant to the Section 5.01(q) of the Master Participation Agreement,
if a Completion Guarantee Acceleration Event occurs with respect to any Parent
Company, such Completion Guarantee Acceleration Event may be cured by providing
an Acceptable Guarantee to the Senior Facility Lenders;

     C. A Completion Guarantee Acceleration Event has occurred with respect to
[____________________] (the "Guarantee Obligor"); and

     D. The Guarantor now wishes to guarantee all obligations of the Guarantee
Obligor to the Administrative Agent under the Completion Guarantee in cure of
such Completion Guarantee Acceleration Event.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor and the
Administrative Agent agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein below, capitalized terms used herein shall have the
meanings assigned to them in Schedule Z to the Master Security Agreement dated
as of September 30, 2005 among Sociedad Minera Cerro Verde S.A.A., Japan Bank
for International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Citibank, N.A., and
Citibank del Peru (as amended from time to time, the "Master Security Agreement"
or "MSA").

     "Guaranteed Obligation": the meaning given in Section 2.01(a) hereof.

     "Guarantee Obligor": the meaning given in Recital C hereof.

     "Guarantee Termination Date": the meaning given in Section 2.01(b) hereof.

     "Guarantor": the meaning given in the Preamble hereto.

     1.02 Interpretation. The rules of interpretation as set forth in Section
1.02 of the MPA are incorporated by reference as if set forth at length herein.

                                   ARTICLE II

                                  THE GUARANTEE

     2.01 The Guarantee.

     (a) The Guarantor unconditionally and irrevocably guarantees to the
Administrative Agent the payment and performance by the Guarantee Obligor of all
of its financial obligations pursuant to the Completion Guarantee and as set
forth in Section 5.01(q) of the Master Participation Agreement (each such
Guarantee Obligor obligation, as it may from time to time be amended or waived
in accordance with the Completion Guarantee or the Master Participation
Agreement, a "Guaranteed Obligation").

     (b) This Guarantee, and all obligations of the Guarantor hereunder, shall
terminate on the earlier of (i) the date on which the Completion Guarantee
terminates pursuant to its own term, or (ii) the date on which the Completion
Guarantee Acceleration Event pursuant to which this Guarantee has been issued is
otherwise cured to the satisfaction of the Administrative Agent ("Guarantee
Termination Date").

     2.02 Subrogation. The Guarantor shall be subrogated to all of the rights of
the Administrative Agent against the Guarantee Obligor and its properties in
respect of any amounts paid by such Guarantor on account of the Guaranteed
Obligations, provided that the Guarantor shall not be entitled to exercise any
such rights until all Secured Obligations have been paid in full.

     2.03 Obligations Unconditional.

     (a) Subject to the conditions specifically set forth in Section 2.01, the
obligations of the Guarantor under Section 2.01 are absolute and unconditional
irrespective of the value, validity, regularity or enforceability of the
Financing Documents, and, to the fullest extent permitted by applicable law,
irrespective of

          (i) the absence of any action to enforce the Guaranteed Obligations
     against the Borrower;


                                                                               2

          (ii) any amendment, waiver or consent by the Administrative Agent with
     respect to any provision of this Guarantee or any Financing Document;

          (iii) the recovery of any judgment against the Borrower or any action
     to enforce the same;

          (iv) the insolvency or bankruptcy of the Borrower;

          (v) the invalidation or unenforceability of the Guaranteed
     Obligations; or

          (vi) any other circumstance which might otherwise constitute a legal
     or equitable discharge or defense of a guarantor or surety.

     (b) The Guarantor agrees that the Administrative Agent may at any time and
from time to time, either before or after the maturity thereof, without notice
to or further consent of the Guarantor, extend the time of payment of, exchange
or surrender collateral for, or renew any of the Guaranteed Obligations owed to
it, and may also make any agreement with the Guarantee Obligor, for the
extension, renewal, payment, compromise, discharge or release thereof, in whole
or in part, or for any modification of the terms thereof or of any agreement
between any Administrative Agent and the Guarantee Obligor, without in any way
impairing or affecting its obligations pursuant hereto.

     (c) The Guarantor hereby unconditionally and irrevocably waives diligence,
presentment, demand and any and all notices whatsoever in respect of the
Guaranteed Obligations and this Guarantee, and any requirement that the
Administrative Agent exhaust any right, power or remedy or proceed against the
Guarantee Obligor under the Financing Documents.

     2.04 Pari passu. The obligations of the Guarantor under this Guarantee rank
pari passu with all other unsecured indebtedness of the Guarantor.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     3.01 Representations and Warranties. The Guarantor represents and warrants
to the Administrative Agent that as of the date of this Guarantee:

     (a) Organization. It is a corporation duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its incorporation
referred to in the recital of the parties at the beginning of this Guarantee.


                                                                               3

     (b) Authority. It has full power and authority to execute and deliver this
Guarantee and to perform its obligations hereunder in accordance with the terms
provided herein.

     (c) Binding Agreement. This Guarantee has been duly authorized, executed
and delivered by it and constitutes a valid and legally binding agreement,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.

     (d) Consents and Approvals for this Agreement. All Governmental Approvals
which are necessary for the execution and delivery by it of this Guarantee and
the performance of its obligations hereunder have been obtained and are in full
force and effect.

     (e) Conflicts. There is no provision of law, statute, regulation, rule,
order, injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Guarantee.

                                   ARTICLE IV

                                  MISCELLANEOUS

     4.01 Effectiveness. This Guarantee shall come into full force and effect
upon its execution and delivery by each of the parties named on the signature
pages hereof.

     4.02 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     4.03 Entire Agreement. This Guarantee constitutes the entire agreement and
understanding, and supersedes all prior agreements and understandings (both
written and oral), between the Guarantor and the Administrative Agent with
respect to the guaranty of Guaranteed Obligations and there are no warranties,
representations or other agreements between the parties in connection with the
subject matter hereof except as specifically set forth herein.

     4.04 Severability. If any provision of this Guarantee shall be invalid,
illegal or unenforceable, the parties hereto agree to the fullest extent they
may effectively do so that the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.


                                                                               4

     4.05 Amendments, etc. The terms of this Guarantee may be waived, altered or
supplemented only by an instrument in writing duly executed by the parties
hereto.

     4.06 Benefit, Successors and Assigns. This Guarantee is for the benefit of
the Administrative Agent, acting on behalf of the Senior Facility Lenders, and
not for the benefit of any other Person. This Guarantee shall be binding upon
the Guarantor and its successors and assigns and shall inure to the benefit of
the successors and assigns of the Administrative Agent.

     4.07 Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by electronic mail confirmed by facsimile transmission (with
written confirmation of receipt, which confirmation may be by facsimile
transmission) (provided that a notice sent by electronic mail shall be duly
given only at the time the facsimile transmission confirming the same is sent)
or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such party (any such communication that is
not in writing shall be confirmed in writing):

     If to the Guarantor, at:

          [Contact information of the Guarantor]

     If to the Administrative Agent, at:

          CALYON New York Branch
          1301 Avenue of the Americas
          New York, New York 10019
          Attention: Ted Vandermel
          Telephone: (212) 261-7888
          Facsimile: (212) 261-3421

     4.08 Execution in Counterparts. This Guarantee may be executed in two
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.

     4.09 Consent to Jurisdiction.

     (a) The Guarantor hereby irrevocably consents and agrees, for the benefit
of the Administrative Agent, that any legal action, suit or proceeding against
it with respect


                                                                               5

to its obligations, liabilities or any other matter under or arising out of or
in connection with this Guarantee may be brought in any Federal or State court
located in New York County in the City of New York and hereby irrevocably
accepts and submits to the non-exclusive jurisdiction of such court with respect
to any such action, suit or proceeding. Each party hereto hereby waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions, suits or proceedings, brought in any such court and
hereby further waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought therein has been brought in an
inconvenient forum.

     (b) The Guarantor hereby irrevocably appoints CT Corporation in New York,
NY, as its authorized agent on which any and all legal process may be served in
any such action, suit or proceeding brought in any Federal or State court
located in New York County in the City of New York. The Guarantor agrees that
service of process in respect of it upon such agent, together with written
notice of such service given to it in the manner provided in Section 4.07
hereof, shall be deemed to be effective service of process upon it in any such
action, suit or proceeding. The Guarantor agrees that the failure of such agent
to give notice to it of any such service shall not impair or affect the validity
of such service or any judgment rendered in any action, suit or proceeding based
thereon. If for any reason such agent shall cease to be available to act as
such, the Guarantor agrees to designate a new agent in New York County in the
City of New York, on the terms and for the purposes of this Section 4.09.
Nothing herein shall be deemed to limit the ability of the Administrative Agent
or any Senior Facility Lender to serve any such legal process in any other
manner permitted by applicable law or to obtain jurisdiction over the Guarantor
or bring actions, suits or proceedings against them in such other jurisdictions,
and in such manner, as may be permitted by applicable law.

     4.10 No Trial by Jury. Each party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Guarantee or the transactions
contemplated hereby.

     4.11 No Immunity. To the extent that any party has or hereafter may acquire
any immunity (sovereign or otherwise), from any legal action, suit or
proceedings, from jurisdiction of any court or from set-off or any legal process
(whether service or notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) with respect to
itself or any of its property, such party hereby irrevocably waives and agrees
not to plead or claim such immunity in respect of its obligations under this
Guarantee or the subject matter hereof (including, without limitation, any
obligation for the payment of money). The parties hereby agree that the waivers
set forth in this Section 4.11 shall have the fullest effect permitted under the
Foreign Sovereign Immunities Act of 1976 of the United States, as amended, and
are intended to be irrevocable and not subject to withdrawal for purposes of
such Act. The


                                                                               6

foregoing waiver shall constitute a present waiver of immunity at any time that
any action is initiated against such party with respect to this Guarantee.

                             [SIGNATURES TO FOLLOW]


                                                                               7

     IN WITNESS WHEREOF, the parties have caused this Guarantee to be duly
executed as of the date first above written.

                                        [GUARANTOR]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        CALYON New York Branch, as
                                        Administrative Agent


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                                                               8

EX-10.4

                                                                    Exhibit 10.4

                                                                  EXECUTION COPY

================================================================================

                         TRANSFER RESTRICTIONS AGREEMENT

                                      among

                       SMM CERRO VERDE NETHERLANDS, B.V.,
                                as a Shareholder,

                     COMPANIA DE MINAS BUENAVENTURA S.A.A.,
                                as a Shareholder,

                          CYPRUS CLIMAX METALS COMPANY,
                                as a Shareholder,

                        SUMITOMO METAL MINING CO., LTD.,
                                  as a Parent,

                              SUMITOMO CORPORATION,
                                  as a Parent,

                            PHELPS DODGE CORPORATION,
                                  as a Parent,

                    JAPAN BANK FOR INTERNATIONAL COOPERATION,
                          as a Senior Facility Lender,

                      SUMITOMO MITSUI BANKING CORPORATION,
                 as a Lead JBIC Arranger and Global Coordinator,

                       THE BANK OF TOKYO-MITSUBISHI, LTD.,
                            as a Lead JBIC Arranger,

                                      KfW,
                          as a Senior Facility Lender,

                             CALYON New York Branch,
       as a Senior Facility Lender, Lead Arranger and Global Coordinator,

                         THE ROYAL BANK OF SCOTLAND PLC,
                 as a Senior Facility Lender and Lead Arranger,

                            THE BANK OF NOVA SCOTIA,
                 as a Senior Facility Lender and Lead Arranger,

                          MIZUHO CORPORATE BANK, LTD.,
                 as a Senior Facility Lender and Lead Arranger,

                                       and

                             CALYON New York Branch,

                             as Administrative Agent

                         Dated as of September 30, 2005

================================================================================



                                TABLE OF CONTENTS



                                                                             Page
                                                                             ----
                                                                          
                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

1.01 Definitions..........................................................     3
1.02 Interpretation.......................................................     3

                                   ARTICLE II

                              TRANSFER RESTRICTIONS

2.01 General Covenants....................................................     4
2.02 Permitted Transfers..................................................     4
2.03 Involuntary Transfers................................................     6
2.04 Effect on Security Interests.........................................     6
2.05 Expropriation Compensation...........................................     6

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

3.01 Representations and Warranties of the Shareholders and the Parents...     7

                                   ARTICLE IV

                                  MISCELLANEOUS

4.01 Termination of Agreement.............................................     8
4.02 Accession............................................................     8
4.03 GOVERNING LAW........................................................     8
4.04 Severability.........................................................     8
4.05 Notices..............................................................     8
4.06 Benefits of Agreement................................................     9
4.07 Execution in Counterparts............................................     9
4.08 Consent to Jurisdiction..............................................    10
4.09 Amendments...........................................................    10
4.10 Effectiveness........................................................    11
4.11 No Trial by Jury.....................................................    11
4.12 No Partnership.......................................................    11
4.13 Expenses.............................................................    11



                                        i



                         TRANSFER RESTRICTIONS AGREEMENT

     This TRANSFER RESTRICTIONS AGREEMENT (this "Agreement"), dated as of
September 30, 2005, is made among:

     SMM CERRO VERDE NETHERLANDS B.V., a corporation organized under the laws of
Netherlands (the "Sumitomo Participant"),

     COMPANIA DE MINAS BUENAVENTURA S.A.A., a Peruvian sociedad anonima abierta
("BVN"),

     CYPRUS CLIMAX METALS COMPANY, a corporation organized under the laws of the
State of Delaware (the "PD Participant", and together with the Sumitomo
Participant and BVN, the "Shareholders"),

     SUMITOMO METAL MINING CO., LTD., a corporation organized under the laws of
Japan ("SMM"),

     SUMITOMO CORPORATION, a corporation organized under the laws of Japan
("SC"),

     PHELPS DODGE, a corporation organized under the laws of New York ("PDC"
and, together with SMM and SC, the "Parents"),

     JAPAN BANK FOR INTERNATIONAL COOPERATION, a Japanese government financial
institution organized under the laws of Japan ("JBIC"), in its capacity as a
Senior Facility Lender,

     SUMITOMO MITSUI BANKING CORPORATION, a stock corporation organized under
the laws of Japan, as lead JBIC arranger and Global Coordinator ("SMBC"),

     THE BANK OF TOKYO-MITSUBISHI, LTD., a banking institution organized under
the laws of Japan, as lead JBIC arranger ("BOT-M" and together with SMBC, in
their capacity as lead JBIC arrangers, the "Lead JBIC Arrangers"),

     KfW, a public corporation formed under the laws of the Federal Republic of
Germany ("KfW"), in its capacity as a Senior Facility Lender,

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic ("Calyon"), in its
capacity as a Senior Facility Lender, Lead Arranger and Global Coordinator,

     THE ROYAL BANK OF SCOTLAND PLC, a Public Limited Company formed under the
laws of Scotland ("RBS"), in its capacity as a Senior Facility Lender and Lead
Arranger,


                                       1



     THE BANK OF NOVA SCOTIA, a Canadian chartered bank, organized under the
laws of Canada ("Scotia Capital"), in its capacity as a Senior Facility Lender
and Lead Arranger,

     MIZUHO CORPORATE BANK, LTD., a banking institution organized under the laws
of Japan ("Mizuho", and collectively with Calyon, RBS and Scotia Capital, the
"Commercial Banks"), in its capacity as a Senior Facility Lender and Lead
Arranger, and

     CALYON New York Branch, a licensed branch of a banking corporation
organized and existing under the laws of the French Republic, as Administrative
Agent for the Senior Lenders (in such capacity, the "Administrative Agent").

                                    WHEREAS:

     A. Sociedad Minera Cerro Verde S.A.A. (the "Borrower") proposes to incur
Senior Loan Obligations in order to develop the Sulfide Project at its existing
Mines in the District of Uchumayo and Yarabamba, Province of Arequipa, Republic
of Peru;

     B. On the date hereof, JBIC has entered into the JBIC Loan Agreement with
Borrower, KfW has entered into the KfW Loan Agreement with Borrower and the
Commercial Banks have entered into the Commercial Banks Loan Agreement with
Borrower. Each such agreement reflects, among other terms, (i) the commitment of
each Senior Facility Lender that is a party thereto to make from time to time
Advances to the Borrower in an amount up to its Aggregate Committed Amount and
(ii) the Borrower's agreement to repay such Advances with interest;

     C. On the date hereof, the Borrower, JBIC, the JBIC Lead Arrangers, KfW,
the Commercial Banks, the Lead Arrangers, the Global Coordinators and the
Administrative Agent have entered into the Master Participation Agreement dated
as of the date hereof (the "Master Participation Agreement" or "MPA"), which
sets forth various terms for the financing of the development of the Sulfide
Project; and

     D. The Shareholders and the Parents have authorized the execution and
delivery of this Agreement to undertake specified obligations to induce the
Senior Facility Lenders to make Senior Loans to the Borrower.

     NOW, THEREFORE, in consideration of the execution of the Master
Participation Agreement and the Senior Facility Loan Agreements by the Senior
Facility Lenders, to induce the Senior Facility Lenders to make Senior Facility
Loans thereunder, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the Shareholders, each of
the Parents, each of the Lead JBIC Arrangers, each of the Senior Facility
Lenders and the Administrative Agent (each a "TRA Party" and collectively, the
"TRA Parties", which term shall also include any Replacement Lender or Bridge
Loan Provider after such Replacement Lender or Bridge Loan Provider has become a
party to this Agreement pursuant to Section 4.02) agree as follows:


                                       2



                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

     1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to the Master Security Agreement among the
Borrower, the Senior Lenders, the Lead JBIC Arrangers, the Global Coordinators,
the Lead Arrangers, the Administrative Agent, the Trustee, the Offshore
Collateral Agent and the Onshore Collateral Agent dated as of the date hereof.

     1.02 Interpretation. In this Agreement, except to the extent that the
context otherwise requires:

          (a) the Table of Contents, Articles and Section headings are for
     convenience of reference only and shall not affect the interpretation of
     this Agreement;

          (b) unless otherwise specified, references to Articles, Sections,
     clauses and Appendices are references to Articles, Sections and clauses of,
     and Appendices to, this Agreement;

          (c) references to any document or agreement, including this Agreement,
     shall be deemed to include references to such document or agreement as
     amended, supplemented or replaced and in effect from time to time in
     accordance with its terms and subject to compliance with the requirements
     set forth herein and therein;

          (d) references to any party to this Agreement or any other document or
     agreement or to any other Person shall include its successors and permitted
     assigns;

          (e) when used in this Agreement, the words "including", "includes" and
     "include" shall be deemed to be followed in each instance by the words
     "without limitation";

          (f) when used in this Agreement, the words "herein", "hereby",
     "hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and
     words of similar import, shall refer to this Agreement in its entirety and
     not to any particular section, subsection, paragraph, sub-paragraph, clause
     or other subdivision, exhibit, schedule or appendix of this Agreement; and

          (g) when used herein, the singular shall include the plural, the
     plural shall include the singular and the use of any gender shall include
     all genders, unless the context requires otherwise.


                                       3



                                   ARTICLE II

                              TRANSFER RESTRICTIONS

     2.01 General Covenants.

     (a) Except as permitted by or provided for in Section 2.02 of this
Agreement, no Shareholder shall sell, assign, convey, transfer or otherwise
dispose of, or directly or indirectly mortgage, pledge or otherwise create or
suffer to exist a lien, charge or other encumbrance or security interest in
(collectively, "Transfer") (i) any of the Common Stock owned, directly or
indirectly, by such Shareholder, at any time (such Shareholder's "Restricted
Common Stock") or (ii) any Subordinated Loan held by such Shareholder.

     (b) PDC shall, directly or indirectly, wholly own and Control (i) the PD
Participant, (ii) any Affiliate of PDC that holds Subordinated Loans made to the
Borrower and (iii) any PD Affiliate Transferee, in each case, for so long as
such Person holds Restricted Common Stock or Subordinated Loans. PDC shall not,
and shall cause each Affiliate of PDC that holds Subordinated Loans made to the
Borrower not to, Transfer such Subordinated Loans except in a Transfer that
would be authorized pursuant to Section 2.02 below (applied mutatis mutandis to
PDC or to such Affiliate).

     (c) SMM and SC shall collectively, directly or indirectly, wholly own and
Control (i) the Sumitomo Participant, (ii) any Affiliate of SMM and SC that
holds Subordinated Loans made to the Borrower and (iii) any Sumitomo Affiliate
Transferee for so long as such Person holds Restricted Common Stock or
Subordinated Loans. SMM and SC shall not, and shall cause each Affiliate of SMM
and SC that holds Subordinated Loans made to the Borrower not to, Transfer such
Subordinated Loans except in a Transfer that would be authorized pursuant to
Section 2.02 below (applied mutatis mutandis to SMM, SC or such Affiliate).

     (d) BVN shall, directly or indirectly, wholly own and Control (i) any
Affiliate of BVN that holds Subordinated Loans made to the Borrower, and (ii)
any BVN Affiliate Transferee, in each case, for so long as such Person holds
Restricted Common Stock or Subordinated Loans. BVN shall not, and cause each
Affiliate of BVN that holds Subordinated Loans made to the Borrower not to,
Transfer such Subordinated Loans except in a Transfer that would be authorized
pursuant to Section 2.02 below (applied mutatis mutandis to BVN or such
Affiliate).

     2.02 Permitted Transfers.

     (a) Each Shareholder may Transfer all or any part of (i) its Restricted
Common Stock or (ii) its interest in any Subordinated Loan, to any of its
Affiliates (such transferee, an "Affiliate Transferee"), that (x) in the case of
BVN is wholly owned, directly or indirectly, and Controlled by BVN and (y) in
the case of the PD Participant is wholly owned, directly or indirectly, and
Controlled by PDC and (z) in the case of the Sumitomo Participant is wholly
owned, directly or indirectly, and Controlled by SMM and SC, collectively,
provided, in each case, that such Affiliate Transferee shall first


                                       4



agree in writing to be bound by the obligations of the transferring Shareholder
under this Agreement. Thereupon, such Affiliate Transferee shall be entitled to
the same rights and be subject to the same restrictions as a Shareholder, with
respect to subsequent assignments of Restricted Common Stock and Subordinated
Loans by such Affiliate Transferee.

     (b) BVN and any BVN Affiliate Transferee may Transfer, after the Completion
Release Date and with the prior written consent of the Administrative Agent
(acting upon instructions of the Supermajority Facility Lenders), (i) Restricted
Common Stock representing in the aggregate up to 49% of BVN's ownership of
Restricted Common Stock held on the date hereof or (ii) up to 49%, in the
aggregate, of the total then-outstanding Subordinated Loans made by BVN and its
Affiliates to the Borrower.

     (c) The PD Participant and any PD Affiliate Transferee may Transfer, after
the Completion Release Date and with the prior written consent of the
Administrative Agent (acting upon instructions of the Supermajority Facility
Lenders),

          (i) any of its Restricted Common Stock so long as such Transfer (x)
     does not reduce the aggregate ownership of Restricted Common Stock of the
     PD Participant and the PD Affiliate Transferees below 50.1% of the
     then-outstanding Common Stock of the Borrower (on a fully diluted basis)
     and (y) does not impair PDC's possession, directly or indirectly, of
     Control of the Borrower, or

          (ii) any of its interest in any Subordinated Loan so long as such
     Transfer does not reduce the aggregate interest of PDC and of its directly
     or indirectly wholly owned Affiliates below 50.1% of the total
     then-outstanding Subordinated Loans made to the Borrower.

     (d) Subject to the prior written consent of each of JBIC (in its sole
discretion) and the Administrative Agent (acting upon instructions of the
Supermajority Facility Lenders), the Sumitomo Participant and any Sumitomo
Affiliate Transferee may Transfer, after the Completion Release Date, (i)
Restricted Common Stock representing in the aggregate up to 49% of the Sumitomo
Participant's ownership of Restricted Common Stock on the date hereof and (ii)
up to 49%, in the aggregate, of the total then-outstanding Subordinated Loans
made by the Sumitomo Participant and its Affiliates to the Borrower.

     (e) Each Senior Facility Lender agrees that its consent to a Transfer of
Restricted Common Stock pursuant to this Section 2.02 shall not be unreasonably
withheld by it (taking due account of the particular circumstances applicable to
such Senior Facility Lender by reason of such Senior Facility Lender's nature or
status or otherwise).

     (f) Each Shareholder shall (i) pledge its Restricted Common Stock pursuant
to the Sponsors Share Pledge and Transfer such Restricted Common Stock subject
to such Sponsors Share Pledge and (ii) pledge its Subordinated Loans pursuant to
the Security Documents.


                                       5



     (g) No Transfer under this Section 2.02 shall be effective unless the
transferee (as permitted herein) assumes in writing all of the obligations of
the transferor under this Agreement and the Financing Documents with respect to
the Restricted Common Stock or Subordinated Loans being transferred. A Transfer
permitted hereunder shall not affect the obligations (if any) of the transferor,
its Parent Company or its Affiliates under any Project Documents to which they
are a party.

     (h) Each Shareholder and each Affiliate Transferee may Transfer all or any
part of (i) its Restricted Common Stock or (ii) its interest in any Subordinated
Loan, in circumstances not contemplated under Section 2.02(a) through (d) with
the prior consent of each Senior Facility Lender.

     2.03 Involuntary Transfers. A Transfer (i) which is not permitted under
Section 2.02 and which is not otherwise permitted under this Agreement, (ii)
which results from any actions by any Person other than the transferor or an
Affiliate thereof and (iii) as to which neither the transferor nor any of its
Affiliates has consented in writing, shall not result in a breach by such
transferor of its obligations under this Agreement unless such Transfer is not
reversed within 90 days of the occurrence thereof; provided that for the purpose
of any determination as to whether a JBIC Event of Default has occurred pursuant
to Section 10.01(c)(ii) of the JBIC Loan Agreement, the foregoing shall only
apply to Transfers of ownership of Restricted Common Stock and Subordinated
Loans if JBIC in its reasonable judgment believes that the conditions set forth
in (ii) and (iii) above are satisfied.

     2.04 Effect on Security Interests. Notwithstanding any other provision of
this Article II, no Transfer which could reasonably be expected to have a
material adverse effect on the security interests created or purported to be
created, for the benefit of the Senior Facility Lenders, by or pursuant to the
Master Security Agreement, in the Restricted Common Stock or the Subordinated
Loans shall be made or become effective for any purpose whatsoever unless (i)
the prior written consent of all Senior Facility Lenders shall have been
obtained, (ii) the transferee shall have delivered to the Administrative Agent,
on behalf of the Senior Lenders, (x) a written consent and acknowledgment to the
security interest of the Senior Lenders in the Restricted Common Stock or the
Subordinated Loans, as the case may be, and (y) an opinion from Peruvian counsel
(as to matters of Peruvian law) or New York counsel (as to matters of NY law),
to the effect that, upon completion of such Transfer the Onshore Collateral
Agent will hold a valid and perfected security first priority security interest
over the Restricted Common Stock or the Subordinated Loans so transferred and
(iii) upon completion of such Transfer, the Administrative Agent is provided
with evidence that any necessary filings and/or registrations were made.

     2.05 Expropriation Compensation. Except as may be otherwise agreed by the
Administrative Agent, JBIC, KfW and each of the Parents with respect to itself,
each of the Parents and the Shareholders agree that, in the event that either it
or any of its subsidiaries (other than the Borrower) directly receives
expropriation compensation from any Peruvian Governmental Authority with respect
to the relevant Shareholder's interests in the Borrower or Subordinated Loans
made to the Borrower, it shall promptly deposit,


                                       6



or shall cause to be promptly deposited into an account of such Parent or
Shareholder pledged to the Offshore Collateral Agent for the benefit of the
Senior Facility Lenders (the "Pledged Account") a portion of such expropriation
compensation equal to its Pro Rata Obligations (as defined below). For purposes
hereof, "Pro Rata Obligations" means an amount equal to the product of any and
all Senior Facility Loan Obligations then outstanding under the Financing
Documents and the Pro Rata Share of the relevant Parent or Shareholder.
Following the delivery by the Requisite Lenders of a Borrower Enforcement
Direction, in accordance with the terms of the Master Security Agreement,
proceeds standing to the credit of the Pledged Account shall be applied to repay
the Senior Facility Loan Obligations or, at the expropriated party's election,
to purchase Senior Facility Loan Obligations pro rata among the Senior Facility
Lenders. Notwithstanding anything else herein, the Parents and the Shareholders
retain any and all rights to compensation received from any insurer with respect
to any expropriatory action relating to the Shareholders' equity interest in the
Borrower.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

     3.01 Representations and Warranties of the Shareholders and the Parents.
Each Shareholder and each Parent represents and warrants to each Senior Facility
Lender with respect to itself that:

     (a) Organization. It is a corporation duly organized, validly existing and
is in good standing under the laws of the jurisdiction of its incorporation
referred to in the recital of the parties at the beginning of this Agreement.

     (b) Authority. It has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder in accordance with the terms
provided herein.

     (c) Binding Agreement. This Agreement has been duly authorized, executed
and delivered by it and constitutes a valid and legally binding agreement,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.

     (d) Consents and Approvals for this Agreement. All Governmental Approvals
which are necessary for the execution and delivery by it of this Agreement and
the performance of its obligations hereunder have been obtained and are in full
force and effect.

     (e) Conflicts. There is no provision of law, statute, regulation, rule,
order, injunction, decree, writ or judgment, no provision of its organizational
documents and no provision of any mortgage, indenture, contract or agreement
binding on it or affecting its properties, which would prohibit, conflict with
or in any way prevent its execution, delivery, or performance of the terms of
this Agreement.


                                       7



     (f) No Immunity. Neither it nor any of its properties has any immunity from
jurisdiction of any court or from any legal process (whether through service,
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise).

     (g) No Legal Proceedings. There are no actions, suits or proceedings
pending or, to its knowledge, threatened against or affecting it or any of its
assets that could, if determined adversely, reasonably be expected to (i)
materially and adversely affect its ability to perform any of its obligations
under this Agreement or (ii) render this Agreement unenforceable.

     (h) Ownership of Common Stock. It owns (i) in the case of BVN, 63,833,717
Common Stock of the Borrower, representing a 18.235% interest (on a fully
diluted basis) in Borrower's equity, (ii) in the case of the PD Participant,
187,500,306 Common Stock of the Borrower, representing a 53.563% interest (on a
fully diluted basis) in Borrower's equity, and (iii) in the case of the Sumitomo
Participant 73,511,763 Common Stock of the Borrower, representing a 21.000%
interest (on a fully diluted basis) in Borrower's equity.

                                   ARTICLE IV

                                  MISCELLANEOUS

     4.01 Termination of Agreement.

     (a) This Agreement shall terminate upon expiration of Commitments and the
full payment of all Senior Loan Obligations owed to the Senior Facility Lenders;
and

     (b) Upon the termination of this Agreement, all of the obligations of each
of the TRA Parties or the TRA Parties with respect to whom the Agreement shall
have terminated shall terminate, and no such TRA Party or TRA Parties shall have
any further liability to the Senior Facility Lenders or the Administrative Agent
in respect hereof.

     4.02 Accession. A Replacement Lender or a Bridge Loan Provider, as the case
may be, may become a party to this Agreement by entering into a New Party
Accession Agreement.

     4.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     4.04 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable, the parties hereto agree to the fullest extent they
may effectively do so that the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

     4.05 Notices. Any notice, request, demand, consent, designation, direction,
instruction, certificate, report or other communication to be given hereunder
shall be given in the English language and will be duly given when delivered in
writing or sent by


                                       8



electronic mail (with written confirmation of receipt, which confirmation may be
by facsimile transmission) (provided that a notice sent by electronic mail shall
be duly given only at the time the facsimile transmission confirming the same is
sent) or facsimile transmission (with written confirmation of receipt, which
confirmation may be by facsimile transmission) to a TRA Party at its address and
facsimile transmission numbers as indicated below or to such other address as
may be furnished for this purpose by such TRA Party at:

     If to the Sumitomo Participant, SMM or SC, at:

          SMM Cerro Verde Netherlands B.V.
          c/o Sumitomo Metal Mining Co., Ltd.
          11-3, 5-Chome Shimbashi,
          Minato-ku, Tokyo 105
          Japan
          Attention: General Manager, Mineral Resources Division
          Telecopier (Fax): (81)-3-3436-7997

     If to the PD Participant or PDC, at:

          One N. Central Avenue
          Phoenix, Arizona  85004
          Attention: General Counsel
          Telecopier (Fax): (602) 366-7321

     If to BVN, to it at:

          Cia. De Minas Buenaventura S.A.A.
          Carlos Villaran 790
          Urb, Santa Catalina, Lima 13, Peru
          Attention: President
          Telecopier: (51)-1-471-7349

     If to a Senior Facility Lender or to the Administrative Agent, at the
address or electronic mail or facsimile numbers set forth in Section 12.10 of
the Master Participation Agreement.

     4.06 Benefits of Agreement. Nothing in this Agreement, express or implied,
shall give to any Person, other than the TRA Parties and their successors and
permitted assigns, any benefit or any legal or equitable right or remedy under
this Agreement.

     4.07 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.


                                       9



     4.08 Consent to Jurisdiction.

     (a) Each Shareholder and each Parent hereby irrevocably consents and
agrees, for the benefit of each TRA Party hereto, that any legal action, suit or
proceeding against it with respect to its obligations, liabilities or any other
matter under or arising out of or in connection with this Agreement may be
brought in any Federal or State court located in New York County in the City of
New York and hereby irrevocably accepts and submits to the non-exclusive
jurisdiction of each such court with respect to any such action, suit or
proceeding. Each Shareholder and each Parent hereby waives any objection which
it may now or hereafter have to the laying of venue of any of the aforesaid
actions, suits or proceedings, brought in any such court and hereby further
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought therein has been brought in an inconvenient forum.

     (b) Each Shareholder and each Parent hereby irrevocably appoints CT
Corporation, with offices at the date of this Agreement at 111 Eighth Avenue,
New York, New York, U.S.A., as its authorized agent on which any and all legal
process may be served in any such action, suit or proceeding brought in any
Federal or State court located in New York County in the City of New York. Each
Shareholder and each Parent agrees that service of process in respect of them
upon such agent, together with written notice of such service given to them in
the manner provided in Section 4.05 hereof, shall be deemed to be effective
service of process upon them in any such action, suit or proceeding. Each
Shareholder and each Parent agrees that the failure of such agent to give notice
to it of any such service shall not impair or affect the validity of such
service or any judgment rendered in any action, suit or proceeding based
thereon. If for any reason such agent shall cease to be available to act as
such, each Shareholder and each Parent agrees to designate a new agent in New
York County in the City of New York, on the terms and for the purposes of this
Section 4.08.

     (c) To the extent that any Parent or Shareholder has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service of notice, attachment prior to judgment, attachment in
aid of execution, execution, sovereign immunity or otherwise) with respect to
itself or its property, it hereby irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement.

     4.09 Amendments.

     (a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) each Shareholder, (ii) each Parent, and (iii) the Administrative Agent,
acting in accordance with Section 10.01 of the Master Participation Agreement.

     (b) No waiver by any TRA Party of any of its rights, powers and privileges
under this Agreement shall be effective other than pursuant to a written
instrument executed by the TRA Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Facility
Lenders can be executed by the


                                       10



Administrative Agent acting in accordance with Section 10.01 of the Master
Participation Agreement.

     4.10 Effectiveness. This Agreement shall come into full force and effect
upon its execution and delivery by each of the parties named on the signature
pages hereof.

     4.11 No Trial by Jury. Each TRA Party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby.

     4.12 No Partnership. Nothing contained in this Agreement and no action by
any of the TRA Parties is intended to constitute or shall be deemed to
constitute among such TRA Parties a partnership, association, joint venture or
other entity.

     4.13 Expenses. Each Parent and Shareholder shall be responsible for all
documented out-of-pocket expenses of the Administrative Agent and the Senior
Facility Lenders (including reasonable fees and expenses of legal counsel)
incurred in connection with the enforcement against it of any provisions of this
Agreement and the collection of any amounts due by or from it hereunder.


                                       11



     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.

                                        SMM CERRO VERDE NETHERLANDS B.V.


                                        By: /s/ Ichiro Abe
                                            ------------------------------------
                                        Name: Ichiro Abe
                                        Title: Managing Director


                                        COMPANIA DE MINAS BUENAVENTURA S.A.A.


                                        By: /s/ Roque Benavides
                                            ------------------------------------
                                        Name: Roque Benavides
                                        Title: President & CEO


                                        CYPRUS CLIMAX METALS COMPANY


                                        By: /s/ Stanton K. Rideout
                                            ------------------------------------
                                        Name: President & CEO
                                        Title: Vice President & Treasurer


                                        SUMITOMO METAL MINING CO., LTD.


                                        By: /s/ Ichiro Abe
                                            ------------------------------------
                                        Name: Ichiro Abe
                                        Title: Managing Executive Officer


                                        SUMITOMO CORPORATION


                                        By: /s/ Mitsuhiko Yamada
                                            ------------------------------------
                                        Name: Mitsuhiko Yamada
                                        Title: Corporate Officer


                                        PHELPS DODGE CORPORATION


                                        By: /s/ Stanton K. Rideout
                                            ------------------------------------
                                        Name: Stanton K. Rideout
                                        Title: President & CEO


                                       12



                                        JAPAN BANK FOR INTERNATIONAL COOPERATION


                                        By: /s/ Akira Ogawa
                                            ------------------------------------
                                        Name: Akira Ogawa
                                        Title: Director General - Energy and
                                        Natural Resource Finance Department


                                        SUMITOMO MITSUI BANKING CORPORATION


                                        By: /s/ Takashi Shimahara
                                            ------------------------------------
                                        Name: Takashi Shimahara
                                        Title: Joint General Manager  --
                                        Structured Finance Department


                                        THE BANK OF TOKYO-MITSUBISHI, LTD.


                                        By: /s/ Hiroaki Makino
                                            ------------------------------------
                                        Name: Hiroaki Makino
                                        Title: Senior Manager - Structured
                                        Finance Division

                                        KfW


                                        By: /s/ Wolfgang Behler
                                            ------------------------------------
                                        Name: Wolfgang Behler
                                        Title: First Vice President


                                        By: /s/ Stephen Pueschel
                                            ------------------------------------
                                        Name: Stephen Pueschel
                                        Title: Senior Project Manager


                                        CALYON NEW YORK BRANCH


                                        By: /s/ Georges Romano
                                            ------------------------------------
                                        Name: Georges Romano
                                        Title: Managing Director


                                        By: /s/ Samuel Sherman
                                            ------------------------------------
                                        Name: Samuel Sherman
                                        Title: Director


                                       13



                                        THE ROYAL BANK OF SCOTLAND PLC


                                        By: /s/ Gregor Hamilton
                                            ------------------------------------
                                        Name: Gregor Hamilton
                                        Title: Associate Director


                                        MIZUHO CORPORATE BANK, LTD.


                                        By: /s/ Masatoshi Abe
                                            ------------------------------------
                                        Name: Masatoshi Abe
                                        Title: Senior Vice President


                                        THE BANK OF NOVA SCOTIA


                                        By: /s/ Michael K. Eddy
                                            ------------------------------------
                                        Name: Michael K. Eddy
                                        Title: Director-Mining


                                        By: /s/ Alexander Mihailovich
                                            ------------------------------------
                                        Name: Alexander Mihailovich
                                        Title: Associate


                                        CALYON NEW YORK BRANCH
                                        As Administrative Agent


                                        By: /s/ Samuel Sherman
                                            ------------------------------------
                                        Name: Samuel Sherman
                                        Title: Director


                                        By: /s/ Ted Vandermel
                                            ------------------------------------
                                        Name: Ted Vandermel
                                        Title: Director


                                       14

EX-10.5

                                                                    Exhibit 10.5

                                                                  EXECUTION COPY

================================================================================

                                U.S.$247,500,000

                               JBIC LOAN AGREEMENT

                                  by and among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,

                    JAPAN BANK FOR INTERNATIONAL COOPERATION,

                                       and

                      SUMITOMO MITSUI BANKING CORPORATION,

                                  as JBIC Agent

                        Dated as of September 30th, 2005

                       Cerro Verde Primary Sulfide Project

================================================================================



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
ARTICLE I DEFINITIONS AND INTERPRETATION.................................     2
   Section 1.01.  Definitions............................................     2
   Section 1.02.  Rules of Interpretation................................     5

ARTICLE II AMOUNT OF FACILITY AND USE OF JBIC LOAN.......................     6
   Section 2.01.  Commitment.............................................     6
   Section 2.02.  Eligible Currency......................................     6

ARTICLE III DISBURSEMENT.................................................     6
   Section 3.01.  Disbursement Procedures................................     6
   Section 3.02.  Records................................................     6
   Section 3.03.  Final Disbursement.....................................     6

ARTICLE IV REPAYMENT AND PREPAYMENT OF THE JBIC LOAN.....................     7
   Section 4.01.  Repayment of JBIC Loan.................................     7
   Section 4.02.  Amortization Schedule..................................     7
   Section 4.03.  Voluntary Prepayment...................................     7
   Section 4.04.  Mandatory Prepayment...................................     8
   Section 4.05.  Amounts Prepaid........................................     8
   Section 4.06.  Suspension and Termination of JBIC
                  Commitment.............................................     8

ARTICLE V INTEREST, COMMITMENT CHARGE AND OVERDUE PAYMENT................     8
   Section 5.01.  Interest...............................................     8
   Section 5.02.  Overdue Payment........................................     8
   Section 5.03.  Commitment Charge......................................     9
   Section 5.04.  Basis of Calculation...................................    10
   Section 5.05.  Up-front Fee...........................................    10
   Section 5.06.  Agency Fee.............................................    11
   Section 5.07.  Promissory Notes.......................................    11

ARTICLE VI PAYMENTS AND CURRENCY.........................................    11
   Section 6.01.  Place and Time of Payment..............................    11
   Section 6.02.  Payments to be Free of Claims and Taxes................    12
   Section 6.03.  Payments in Eligible Currency..........................    12



                                       -i-



                               TABLE OF CONTENTS
                                   (continued)



                                                                            PAGE
                                                                            ----
                                                                         
   Section 6.04.  Payment to be made on Business Day.....................    12
   Section 6.05.  Borrower Acknowledgment................................    12

ARTICLE VII  REPRESENTATIONS AND WARRANTIES..............................    12
   Section 7.01.  Representations and Warranties.........................    12
   Section 7.02.  JBIC Environmental Guidelines..........................    12

ARTICLE VIII COVENANTS...................................................    13
   Section 8.01.  Master Participation Agreement Covenants...............    13

ARTICLE IX   ENVIRONMENTAL AND SOCIAL CONSIDERATIONS.....................    13
   Section 9.01.  Environmental and Social Considerations................    13
   Section 9.02.  Effect of Breach of Environmental and Social
                  Considerations ........................................    14

ARTICLE X    EVENTS OF DEFAULT; REMEDIES.................................    14
   Section 10.01. Events of Default......................................    14
   Section 10.02. Consequences of JBIC Event of Default..................    15

ARTICLE XI   CONDITIONS PRECEDENT........................................    15
   Section 11.01. Conditions Precedent to Initial Disbursement...........    15
   Section 11.02. Conditions to Subsequent JBIC Disbursements............    15

ARTICLE XII  TAXES, FEES AND EXPENSES....................................    16
   Section 12.01. Indemnification for Taxes, Fees and Expenses...........    16
   Section 12.02. Relevant Currency......................................    17

ARTICLE XIII GOVERNING LAW AND JURISDICTION..............................    17
   Section 13.01. GOVERNING LAW..........................................    17
   Section 13.02. Good Faith Consultation................................    17
   Section 13.03. Submission to Jurisdiction.............................    17
   Section 13.04. WAIVER OF TRIAL........................................    17

ARTICLE XIV  JBIC AGENT..................................................    17
   Section 14.01. Appointment of JBIC Agent..............................    17
   Section 14.02. Tax Certification......................................    18

ARTICLE XV   MISCELLANEOUS...............................................    18
   Section 15.01. Confidentiality........................................    18



                                      -ii-



                               TABLE OF CONTENTS
                                   (continued)



                                                                            PAGE
                                                                            ----
                                                                         
   Section 15.02. No Assignment; Funding.................................    19
   Section 15.03. No Waiver, Remedies Cumulative.........................    19
   Section 15.04. Partial Illegality.....................................    19
   Section 15.05. Communications.........................................    19
   Section 15.06. Use of English Language................................    20
   Section 15.07. Successors and Assigns.................................    20
   Section 15.08. Further Assurances.....................................    21
   Section 15.09. Counterparts...........................................    21
   Section 15.10. Abbreviation...........................................    21



                                      -iii-



                                       ANNEXES

Annex A Disbursement Procedures
        Schedule 1 Request for Disbursement
        Schedule 2 Statement of Expenditures
        Schedule 3 Table of Proposed Disbursements
        Schedule 4 JBIC Disbursement Schedule

Annex B Amortization Schedule

Annex C Repayment and Disbursement Accounts

Annex D Environmental Monitoring Form

Annex E JBIC Environmental Guidelines

Annex F Tax Certification

Annex G Disbursement and Payment Procedures

Annex H Form of Promissory Note

Annex I Environmental Disclosure


                                      -iv-



                               JBIC LOAN AGREEMENT

          This JBIC LOAN AGREEMENT made as of September 30th, 2005 (this
"AGREEMENT") by and among SOCIEDAD MINERA CERRO VERDE S.A.A., a Peruvian
sociedad anonima abierta listed on the Lima Stock Exchange and organized under
the laws of Peru (the "BORROWER"), JAPAN BANK FOR INTERNATIONAL COOPERATION
("JBIC"), and SUMITOMO MITSUI BANKING CORPORATION, in its capacity as JBIC Agent
(the "JBIC AGENT").

                                   WITNESSETH:

          (A) WHEREAS, (i) the Borrower owns the Cerro Verde copper mine,
including a copper leaching and solution extraction/electrowinning (SX/EW)
operation, located in the district of Uchumayo and Yarabamba, Province of
Arequipa, Peru and (ii) the board of directors of the Borrower has approved the
development (the "SULFIDE PROJECT") of the sulfide portion of the ore body
beneath the oxide portion of the ore body currently in production, as more fully
set forth in Schedule D to the Master Participation Agreement (as defined
below);

          (B) WHEREAS, the Borrower, JBIC, each of the Senior Facility Lenders
party thereto, and the Appointed Parties party thereto have entered into the
Master Participation Agreement dated as of the date hereof (the "MASTER
PARTICIPATION AGREEMENT") and the Master Security Agreement dated as of the date
hereof, containing, inter alia, certain representations, warranties, and
affirmative and negative covenants of the Borrower to the Senior Facility
Lenders, certain uniform conditions of disbursement for the Senior Facility
Loans, certain other undertakings, common events of default and security
provisions for the common benefit of the Senior Facility Lenders;

          (C) WHEREAS, JBIC is a governmental financial institution of Japan
which has among its objectives providing overseas investment loans to companies
in developing countries in which Japanese companies invest, and has agreed, in
accordance with the Japan Bank for International Cooperation Law and
institutional objectives, to provide a credit facility to the Borrower, which is
invested in by Japanese companies and exports a certain portion of its mining
products to Japan, for purposes of developing and promoting mining activities in
Peru to be carried out by the Borrower;

          (D) WHEREAS, the Borrower has requested JBIC to make funds available
to the Borrower for the financing of the Sulfide Project described above in
paragraph (A)(ii); and

          (E) WHEREAS, JBIC intends that the funding of the Tranche B Loan (as
defined below) shall be provided only upon disbursement of the Tranche B Loan
Funds by certain financial institutions designated as the JBIC Tranche B Funding
Source Banks hereunder.

          NOW THEREFORE, in consideration of the foregoing and of the agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:


                                       -1-



                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION

          Section 1.01. Definitions. For all purposes of this Agreement, except
as otherwise defined herein, capitalized terms used herein shall have the
respective meanings ascribed to them in the Master Participation Agreement or
the Master Security Agreement, as the case may be. In addition, the following
terms shall have the following meanings:

          "ALLEGED BREACH NOTICE": as defined in Section 9.02;

          "AMORTIZATION SCHEDULE": the schedule of the dates and amounts of
repayments of the Tranche A Loan and Tranche B Loan set forth in Annex B, as the
same may be amended from time to time in accordance with the provisions of this
Agreement;

          "AVAILABILITY PERIOD": commencing on the date on which all the
conditions set forth in Section 11.01 have been satisfied and ending on the
Availability Period End Date;

          "CALCULATION DATE": (i) with respect to any Interest Period, the day
which is two (2) LIBOR Business Days prior to the commencement of such Interest
Period; and (ii) with respect to any Overdue Period, the day which is two (2)
LIBOR Business Days prior to (a) the day on which the Overdue Amount becomes due
and payable (for the period from and including such due date up to and excluding
the immediately succeeding Interest Payment Date (in the case where such period
includes the date of actual receipt of the payment by JBIC, up to and excluding
such date)), and (b) to the extent such overdue amount is not paid during the
period described in Clause (a) above each succeeding Interest Payment Date (for
the subsequent period from and including such Interest Payment Date up to and
excluding the immediately succeeding Interest Payment Date (in the case where
such period includes the date of actual receipt of the payment by JBIC, up to
and excluding such date));

          "DEFAULT": any condition or event which constitutes an MPA Event of
Default or a JBIC Event of Default or which with the giving of notice or lapse
of time or both would, unless cured or waived, become an MPA Event of Default or
a JBIC Event of Default;

          "DISBURSEMENT DATE": each date a JBIC Disbursement is made in
accordance with the provisions of this Agreement;

          "DISBURSEMENT PROCEDURES": the disbursement procedures set forth in
Annex A hereto;

          "DISBURSEMENT SCHEDULE": the disbursement schedule set forth in
Schedule 4 to Annex A;

          "ELIGIBLE CURRENCY": as defined in Section 2.02;

          "ENVIRONMENTAL AND SOCIAL CONSIDERATIONS": the considerations
described in Section 9.01(b);


                                       -2-



          "FLOATING RATE": with respect to any Interest Period or any Overdue
Period, (i) the rate per annum (on the basis of a 360-day year) quoted on the
Telerate Screen Page 3750 for the purpose of displaying London interbank offered
rates of major banks for deposits in Dollars as the "British Bankers Association
Interest Settlement Rate" in Dollars (hereinafter referred to as "BBA LIBOR"),
or if such page ceases to display, such other page on Telerate or on such other
service as may be selected by JBIC as suitable for determining BBA LIBOR, for a
period of six (6) months, at approximately 11:00 a.m., London time, on the
relevant Calculation Date, or (ii) if no rate is quoted on such pages on such
Calculation Date, the average (rounded upwards, if necessary, to the nearest
one-sixteenth of one per cent (1/16%)) of the rates per annum for a period of
six (6) months at which deposits in Dollars are offered to at least two
Reference Banks, as set out below, in the London interbank market, in each case,
at approximately 11:00 a.m., London time, on such Calculation Date. "REFERENCE
BANKS" shall mean two or more banks selected by JBIC. In the event that such
rate is not available at such time for any reason, then "Floating Rate" for such
Interest Period or Overdue Period shall be determined by JBIC;

          "GUARANTEE PAYMENT": as defined in Section 5.02(b);

          "INDEMNITEE": as defined in Section 12.01(b);

          "JBIC": as defined in the Recitals hereto;

          "JBIC AGENT": Sumitomo Mitsui Banking Corporation in its capacity as
JBIC Agent;

          "JBIC DISBURSEMENT": each disbursement of the JBIC Facility made in
accordance with the provisions of this Agreement, or, as the context may
require, the principal amount of such disbursement from time to time
outstanding;

          "JBIC ENVIRONMENTAL GUIDELINES": means the Japan Bank for
International Cooperation Guidelines for Confirmation of Environmental and
Social Considerations, dated April, 2002, a copy of which is attached hereto as
Annex E;

          "JBIC EVENT OF DEFAULT": as defined in Section 10.01(c);

          "JBIC FACILITY": as defined in Section 2.01;

          "JBIC LOAN": the aggregate principal amount of all JBIC Disbursements
hereunder by JBIC to the Borrower from time to time outstanding;

          "JBIC AGENT NEW YORK DISBURSEMENT ACCOUNT": the JBIC Agent New York
disbursement account specified in Annex C (or such other account as may be
designated from time to time by the JBIC Agent);

          "JBIC AGENT TOKYO DISBURSEMENT ACCOUNT": the JBIC Agent Tokyo
disbursement account specified in Annex C (or such other account as may be
designated from time to time by the JBIC Agent);


                                       -3-



          "JBIC AGENT NEW YORK REPAYMENT ACCOUNT": the JBIC Agent New York
repayment account specified in Annex C (or such other account as may be
designated from time to time by the JBIC Agent);

          "JBIC NEW YORK REPAYMENT ACCOUNT": the JBIC repayment account
specified in Annex C (or such other account as may be designated from time to
time by JBIC Agent);

          "JBIC TRANCHE B FUNDING SOURCE BANK": each of the financial
institutions providing the funds for the Tranche B Loan;

          "LIBOR BUSINESS DAY": a day on which dealings in deposits in Dollars
are carried on in the London interbank Euro-currency market;

          "MASTER PARTICIPATION AGREEMENT": as defined in the Recitals hereto;

          "MATERIAL PROJECT PARTY": a party to any of the Closing Documents;

          "MONTH": a period commencing on a specific day in any calendar month
and ending on and including the day immediately preceding the numerically
corresponding day in the next succeeding calendar month, provided that if there
is no such numerically corresponding day in the next succeeding calendar month,
such period shall expire on and including the last day of such next succeeding
calendar month, and references to "Months" shall be construed accordingly;

          "OVERDUE AMOUNT": the Tranche A Overdue Amount and Tranche B Overdue
Amount;

          "OVERDUE INTEREST": the Tranche A Overdue Interest and Tranche B
Overdue Interest;

          "OVERDUE PERIOD": the Tranche A Overdue Period and Tranche B Overdue
Period;

          "PAYMENT AMOUNT": as defined in Annex G;

          "PAYMENT PROCEDURES": the payment procedures set forth in Annex G;

          "PERSON": means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other juridical entity, or a
sovereign state or any agency, authority or political subdivision thereof, or
any international organization, agency or authority;

          "PREPAYMENT NOTICE": as defined in Section 4.03;

          "RELEVANT CURRENCY": as defined in Section 12.02;

          "REQUEST FOR DISBURSEMENT": a request given by the Borrower to the
JBIC Agent in the form specified in Schedule 1 to Annex A;


                                       -4-



          "REQUESTED DISBURSEMENT DATE": the Business Day specified in a Request
for Disbursement on which the Borrower has requested JBIC to make a JBIC
Disbursement pursuant to this Agreement and the Master Participation Agreement;

          "STATEMENT OF EXPENDITURES": a statement furnished by the Borrower
which shall be in the form specified in Schedule 2 to Annex A;

          "TRANCHE A": as defined in Section 2.01;

          "TRANCHE A LOAN": as defined in Section 2.01;

          "TRANCHE A OVERDUE AMOUNT": as defined in Section 5.02(a);

          "TRANCHE A OVERDUE INTEREST": as defined in Section 5.02(a);

          "TRANCHE A OVERDUE PERIOD": as defined in Section 5.02(a);

          "TRANCHE B": as defined in Section 2.01;

          "TRANCHE B LOAN": as defined in Section 2.01;

          "TRANCHE B LOAN FUNDS": the funds provided by the JBIC Tranche B
Funding Source Banks for the Tranche B Loans;

          "TRANCHE B OVERDUE AMOUNT": as defined in Section 5.02(b);

          "TRANCHE B OVERDUE INTEREST": as defined in Section 5.02(b); and

          "TRANCHE B OVERDUE PERIOD": as defined in Section 5.02(b).

          Section 1.02 Rules of Interpretation.

          (a) Except as otherwise expressly provided herein, the rules of
interpretation set forth in Section 1.02 of the Master Participation Agreement
shall apply to this Agreement.

          (b) This Agreement and the Master Participation Agreement shall be
viewed as, and shall constitute, one agreement governing the terms and
conditions of the Loans. Except in connection with a breach of Section 7.02 and
Article IX, remedies shall be exercised solely pursuant to and in accordance
with the Master Participation Agreement and the Master Security Agreement,
provided that in connection with the occurrence of a JBIC Event of Default, (i)
JBIC and the JBIC Agent may exercise the remedies set forth in Section 10.02 and
(ii) all other Borrower Enforcement Actions shall be exercised solely in
accordance with the Master Security Agreement.

          (c) In the event of conflict between this Agreement and the Master
Participation Agreement or the Master Security Agreement, except for Section
3.02, Section 4.06(b), Section 7.02, Article IX, Article X, Section 15.01,
Section 15.02 and Annex A, the Master Participation Agreement or the Master
Security Agreement, as the case may be, shall prevail.


                                       -5-



                                   ARTICLE II

                     AMOUNT OF FACILITY AND USE OF JBIC LOAN

          Section 2.01. Commitment. JBIC hereby agrees to make available to the
Borrower, on and subject to the terms and conditions of this Agreement, a loan
facility in Dollars in an aggregate amount not exceeding two hundred forty-seven
million five hundred thousand Dollars (U.S.$247.5 million) (the "JBIC
FACILITY"), consisting of (a) a loan facility in Dollars in an aggregate
principal amount not exceeding one hundred seventy-three million two hundred
fifty thousand Dollars (U.S.$173.25 million) (such loan facility is herein
referred to as "TRANCHE A" and the aggregate principal amount of loans made
under Tranche A from time to time outstanding hereunder is referred to as the
"TRANCHE A LOAN") and (b) a loan facility in Dollars in an aggregate principal
amount not exceeding seventy-four million two hundred fifty thousand Dollars
(U.S.$74.25 million) (such loan facility is herein referred to as "TRANCHE B"
and the aggregate principal amount of loans made under Tranche B from time to
time outstanding hereunder is referred to as the "TRANCHE B LOAN").

          Section 2.02. Eligible Currency. The currency in which JBIC shall make
JBIC Disbursements and, except as provided in Section 12.02, the Borrower shall
make all payments hereunder is Dollars (the "ELIGIBLE CURRENCY").

                                  ARTICLE III

                                  DISBURSEMENT

          Section 3.01. Disbursement Procedures. Subject to the fulfillment of
the conditions referred to in Article XI and the other terms and conditions of
this Agreement, JBIC shall disburse the JBIC Facility only in accordance with
the Disbursement Procedures. Each such JBIC Disbursement shall consist of a
disbursement of the Tranche A Loan and the Tranche B Loan made at the same time
and in proportion to the aggregate principal amount of Tranche A and the
aggregate principal amount of Tranche B, provided that if the condition set
forth in Section 11.01(c) with respect to the initial Disbursement and Section
11.02(c) with respect to all subsequent JBIC Disbursements is not met in respect
of Tranche B, JBIC shall disburse only such portion of Tranche B with respect to
which the JBIC Agent shall have received the corresponding portion thereof from
the relevant JBIC Tranche B Funding Source Banks.

          Section 3.02. Records. The Borrower shall retain or cause to be
retained until two (2) years after the Availability Period End Date all records
(contracts, orders, notices, invoices, bills, receipts and other documents)
evidencing the expenditures for which JBIC Disbursements are requested in
accordance with Annex A hereto and shall enable representatives or agents of
JBIC to examine such records.

          Section 3.03. Final Disbursement. No JBIC Disbursement shall be made
by JBIC under this Agreement or the Master Participation Agreement after the
Availability Period End Date, unless otherwise agreed in writing by JBIC and in
accordance with Section 10.01 of the Master Participation Agreement.


                                       -6-



                                   ARTICLE IV

                    REPAYMENT AND PREPAYMENT OF THE JBIC LOAN

          Section 4.01. Repayment of JBIC Loan. On each Payment Date, the
Borrower shall repay a portion of the aggregate principal amount of the JBIC
Loan outstanding on the Availability Period End Date in an amount equal to the
product of such aggregate principal amount of the JBIC Loan multiplied by the
percentage set forth on the Amortization Schedule with respect to such Payment
Date. The final principal installment shall be repaid on the Sixteenth (16th)
Payment Date and in any event shall be in an amount equal to the aggregate
principal amount of the JBIC Loan outstanding on such date. The final Payment
Date shall occur not later than ninety (90) months after the first Payment Date,
it being understood that in no event shall the Borrower be required to repay an
amount exceeding the principal amount of the JBIC Loan outstanding on such
Payment Date.

          Section 4.02. Amortization Schedule.

          (a) If any prepayment of the JBIC Loan occurs, the amount prepaid
shall be deducted ratably from each of the installments shown in the
Amortization Schedule.

          (b) Promptly after the Availability Period End Date, or, if any
adjustment pursuant to paragraph (a) of this Section 4.02 shall be made,
promptly after such adjustment, the JBIC Agent (in consultation with JBIC) shall
prepare and deliver to the Borrower a notice together with the adjusted
Amortization Schedule setting forth the amount of each installment to be repaid
by the Borrower on each Repayment Date. Such adjusted Amortization Schedule
shall be conclusive in the absence of manifest error.

          Section 4.03. Voluntary Prepayment.

          (a) Except as expressly provided otherwise in the Master Participation
Agreement, the Borrower may not voluntarily prepay all or any part of the JBIC
Loan.

          (b) Subject to satisfaction of the terms of Sections 3.04 and 3.05 of
the Master Participation Agreement, the Borrower may, on any Payment Date
falling after the Completion Release Date and upon giving no less than sixty
(60) days' prior written irrevocable notice to the JBIC Agent and to JBIC (which
notice shall state the amount to be prepaid and the Payment Date on which such
voluntary prepayment shall be made; such notice, a "PREPAYMENT NOTICE"), prepay
in advance of maturity all or any part (but if in part the amount of any
prepayment shall be at least five million five hundred thousand Dollars
(U.S.$5,500,000)) of the JBIC Loan, together with all interest accrued thereon
up to and including the day immediately preceding the date of such prepayment.
Once given, a Prepayment Notice may not be withdrawn.

          (c) In the event of a voluntary prepayment, the Borrower shall pay a
prepayment premium of one-half of one per cent (0.5%) of the amount of principal
amount of Tranche A to be prepaid to JBIC, which premium shall be paid
simultaneously with such prepayment (the "PREPAYMENT PREMIUM"). Once the date
for any voluntary prepayment has been notified pursuant to clause (b) above,
such date shall be deemed as the due date for the amounts to be paid on that
date (including the Prepayment Premium), and should the Borrower


                                       -7-



fail to pay any such amount on such date, the Borrower shall pay interest on
such overdue principal and/or interest and/or Prepayment Premium. Any request
for prepayment made by the Borrower in accordance with this Agreement shall be
irrevocable and the Borrower shall be bound to prepay the JBIC Loan in
accordance therewith.

          (d) Partial prepayments shall be applied to the JBIC Loan in
accordance with Section 3.08 of the Master Participation Agreement.

          Section 4.04. Mandatory Prepayment. The Borrower shall prepay the JBIC
Loan in accordance with the terms of Section 3.06 of the Master Participation
Agreement.

          Section 4.05. Amounts Prepaid. Amounts prepaid pursuant hereto shall
not be reborrowed.

          Section 4.06. Suspension and Termination of JBIC Commitment.

          (a) JBIC or the JBIC Agent may, by notice to the Borrower, suspend the
commitment to make available the JBIC Facility under the circumstances set forth
in Section 3.10 of the Master Participation Agreement.

          (b) JBIC or the JBIC Agent may, by notice to the Borrower terminate
the commitment to make available the JBIC Facility in accordance with Section
10.02.

                                   ARTICLE V

                 INTEREST, COMMITMENT CHARGE AND OVERDUE PAYMENT

          Section 5.01. Interest. The Borrower shall pay interest on the JBIC
Loan for each Interest Period at the rate of (a) in the case of Tranche A, the
Floating Rate for such Interest Period plus (i) prior to the Completion Release
Date 0.875% per annum and (ii) following the Completion Release Date 1.475% per
annum and (b) in the case of Tranche B, the Floating Rate for such Interest
Period plus (i) prior to the Completion Release Date 1.35% per annum and (ii)
following the Completion Release Date 1.85% per annum. Such interest shall be
paid in arrears in respect of the Tranche A Loan and Tranche B Loan on each
Interest Payment Date for each Interest Period.

          Section 5.02. Overdue Payment.

          (a) If the Borrower fails to pay any principal or interest payable
under this Agreement with respect to Tranche A on the due date thereof (such
overdue amount being hereinafter referred to as the "TRANCHE A OVERDUE AMOUNT"),
the Borrower shall pay JBIC interest (hereinafter referred to as the "TRANCHE A
OVERDUE INTEREST") on such Tranche A Overdue Amount for the period from and
including the due date thereof up to and excluding the date of actual receipt of
the payment by JBIC (hereinafter referred to as the "TRANCHE A OVERDUE PERIOD")
on demand, to the fullest extent permitted by applicable law, at the applicable
interest rate and margin set forth in Section 5.01 plus 2% per annum on each
Calculation Date. Such Tranche A Overdue Interest shall accrue after as well as
before judgment and in accordance


                                       -8-



with Section 5.04. Interest at the rate stipulated in Section 5.01 shall not
accrue on any Tranche A Overdue Amount during this Period.

          (b) If the Borrower fails to pay any principal or interest payable
under this Agreement with respect to Tranche B on the due date thereof (such
overdue amount being hereinafter referred to as the "TRANCHE B OVERDUE AMOUNT"),
the Borrower shall pay JBIC interest (hereinafter referred to as the "TRANCHE B
OVERDUE INTEREST") on such Tranche B Overdue Amount for the period from and
including the due date thereof up to and excluding the date of actual receipt of
the payment by JBIC (hereinafter referred to as the "TRANCHE B OVERDUE PERIOD")
on demand, to the fullest extent permitted by applicable law, at the applicable
interest rate and margin set forth in Section 5.01 plus 2% per annum on each
Calculation Date provided that, if JBIC has made a payment to the JBIC Tranche B
Funding Source Banks, under a political risk guarantee issued to such JBIC
Tranche B Funding Source Banks (a "GUARANTEE PAYMENT"), interest on such portion
of the Tranche B Overdue Amount equal to the amount of the Guarantee Payment
shall accrue at a rate per annum equal to the reasonably evidenced costs of
funds to JBIC of funding such Guarantee Payment from time to time, as determined
by JBIC in its sole discretion (if such rate is greater than the applicable
interest rate and margin set forth in Section 5.01(b)), plus 2% per annum. Such
Tranche B Overdue Interest shall accrue after as well as before judgment and in
accordance with Section 5.04. Interest at the rate stipulated in Section 5.01
shall not accrue on any Tranche B Overdue Amount during the Tranche B Overdue
Period.

          (c) Upon request by the Borrower, the JBIC Agent will promptly notify
the Borrower of the Floating Rate so determined by JBIC, provided that the
Borrower's obligation to pay such Tranche A Overdue Interest and Tranche B
Overdue Interest shall not be conditional upon notification of the relevant rate
to the Borrower by the JBIC Agent and such determination by JBIC shall be
conclusive absent manifest error.

          (d) Payment of interest by the Borrower in accordance with clause (a)
above shall not prejudice the right of JBIC to exercise any other of its rights
or claims hereunder, at law or otherwise to remedy any such failure to pay any
amount on the due date for payment hereunder.

          Section 5.03. Commitment Charge.

          (a) The Borrower shall pay to the JBIC Agent in consideration of the
JBIC Loan a commitment charge on the daily unutilized portion of Tranche A, as
such Tranche A may be reduced or terminated as contemplated by Section 2.03 of
the Master Participation Agreement, at the rate of 0.25% per annum, and such
commitment charge shall accrue from and including the date hereof to and
including the Availability Period End Date. Such commitment charge shall be
payable in arrears on each Interest Payment Date and on each date falling three
(3) calendar months after each such Interest Payment Date for the period
commencing on the date hereof (in the case of the first payment of such
commitment charge) or the immediately preceding Interest Payment Date or the
date falling three (3) calendar months thereafter (in the case of each
subsequent payment of such commitment charge) and ending on the day immediately
preceding such subsequent Interest Payment Date or the date falling three (3)


                                       -9-



calendar months thereafter, with the last installment of such commitment charge
to be paid on the Availability Period End Date.

          (b) The Borrower shall pay to the JBIC Agent in consideration of the
JBIC Loan a commitment charge on the daily unutilized portion of Tranche B, as
such Tranche B may be reduced or terminated as contemplated by Section 2.03 of
the Master Participation Agreement, at the rate of 0.25% per annum, and such
commitment charge shall accrue from and including the date hereof to and
including the Availability Period End Date. Such commitment charge shall be
payable in arrears on each Interest Payment Date and on each date falling three
(3) calendar months after each such Interest Payment Date for the period
commencing on the date hereof (in the case of the first payment of such
commitment charge) or the immediately preceding Interest Payment Date or the
date falling three (3) calendar months thereafter (in the case of each
subsequent payment of such commitment charge) and ending on the day immediately
preceding such subsequent Interest Payment Date or the date falling three (3)
calendar months thereafter, with the last installment of such commitment charge
to be paid on the Availability Period End Date.

          Section 5.04. Basis of Calculation.

          (a) Interest on Tranche A shall accrue on a day-to-day basis and be
computed on the basis of a year of three hundred and sixty (360) days and the
actual number of days elapsed (fractional sums of less than one cent (U.S.$0.01)
being disregarded). Notwithstanding anything to the contrary in the Master
Participation Agreement or any other Financing Document, interest on the JBIC
Tranche A Loan shall commence to accrue from the date of the JBIC Disbursement
in Tokyo, Japan and shall cease to accrue only upon receipt by the JBIC Agent of
payment of such interest in New York, New York at the JBIC Agent New York
Repayment Account.

          (b) Interest on Tranche B shall accrue on a day-to-day basis and be
computed on the basis of a year of three hundred and sixty (360) days and the
actual number of days elapsed (fractional sums of less than one cent (U.S.$0.01)
being disregarded). Notwithstanding anything to the contrary in the Master
Participation Agreement or any other Financing Document, interest on the JBIC
Tranche B Loan shall commence to accrue from the date of the JBIC Disbursement
in Tokyo, Japan and shall cease to accrue only upon receipt by the JBIC Agent of
payment of such interest in New York, New York at the JBIC Agent New York
Repayment Account.

          Section 5.05. Up-front Fee. Subject to Section 12.21(e) of the Master
Participation Agreement, the Borrower shall pay to the JBIC Agent in
consideration of the JBIC Loan (i) an up-front fee with respect to the Tranche A
Loans in the amount of 0.85% times the aggregate principal amount of Tranche A
on the earlier of the Closing Date and the date that is 30 (thirty) days after
the date of this Agreement; and (ii) an up-front fee with respect to the Tranche
B Loans in the amount of 1.10% times the aggregate principal amount of Tranche B
on the earlier of the Closing Date and the date that is 30 (thirty) days after
the date of this Agreement.


                                      -10-



          Section 5.06. Agency Fee. The Borrower shall pay to the JBIC Agent in
respect of this Agreement, the Master Participation Agreement and any other
Financing Documents all fees provided for in the fee letters executed between
the Borrower and the JBIC Agent, the amount and method of payment of which shall
be agreed separately in such fee letters.

          Section 5.07. Promissory Notes. (a) As additional evidence of the
Borrower's obligation to pay the principal of the JBIC Loans as provided in
Section 4.01 hereof, the Borrower shall execute and deliver to the JBIC Agent on
behalf of JBIC Promissory Notes issued by the Borrower, in substantially the
form set forth in Annex H, with a dual column translation into Spanish to be
included therein, in accordance with Section 2.08 of the Master Participation
Agreement.

          (b) The execution and delivery by the Borrower of the Promissory Notes
shall not affect in any way whatsoever the rights or obligations of the Borrower
under this Agreement, and the right and claims of JBIC under the Promissory
Notes held by it shall not replace or supersede the rights and claims of JBIC
hereunder, provided that payment of any part of the principal of any such
Promissory Note in accordance with the terms of this Agreement shall, to the
extent that such payment if made hereunder would discharge the Borrower's
obligations hereunder in respect of the payment of the principal of the JBIC
Loan evidenced by such Promissory Note, discharge pro tanto and the payment of
any principal of a JBIC Loan in accordance with the terms and conditions hereof
shall discharge the obligations of the Borrower under the Promissory Note
evidencing such JBIC Loan to the extent of such payment.

                                   ARTICLE VI

                              PAYMENTS AND CURRENCY

          Section 6.01. Place and Time of Payment. (a) All payments shall be
made in accordance with the Payment Procedures set forth in Annex G (or such
other payment procedures as may be agreed by the parties from time to time).

          (b) All payments to be made by the Borrower under this Agreement and
the Promissory Notes shall be paid in the Eligible Currency (or, if made
pursuant to Article XII, in the Relevant Currency) in immediately available
funds to the JBIC Agent at the JBIC Agent New York Repayment Account. In all
cases payment shall be required to be made to the JBIC Agent no later than 11:00
a.m., New York time, on the relevant Payment Date. Any payment made on such due
date but after such time shall be deemed to have been made on the immediately
succeeding Business Day, and Tranche A Overdue Interest pursuant to Section
5.02(a) and Tranche B Overdue Interest pursuant to Section 5.02(b) shall accrue
and be payable upon any payment so made. So long as the JBIC Agent receives each
such payment by 11:00 a.m., New York time, the JBIC Agent shall transfer such
funds to (i) JBIC at the JBIC New York Repayment Account and (ii) to the Tranche
B Funding Source Banks to such account as may be designated from time to time by
each of the Tranche B Funding Source Banks, in each case on the same Business
Day no later than 12:00 p.m., New York time.


                                      -11-



          Section 6.02. Payments to be Free of Claims and Taxes. Section 3.09 of
the Master Participation Agreement, as qualified by Section 12.13 of the Master
Participation Agreement, is incorporated by reference as is fully set forth
herein.

          Section 6.03. Payments in Eligible Currency. The obligation of the
Borrower hereunder to make payments in the Eligible Currency or the Relevant
Currency, as the case may be, shall not be discharged or satisfied by any
amount, tender or recovery (whether pursuant to any judgment or otherwise)
expressed, paid or made in or converted into any currency other than the
Eligible Currency or the Relevant Currency, as the case may be, except to the
extent to which such amount, tender or recovery so expressed, paid, made or
converted shall result in the effective receipt by JBIC of the full amount of
the Eligible Currency or the Relevant Currency, as the case may be, payable to
JBIC hereunder at any relevant time and accordingly the primary obligation of
the Borrower shall be enforceable as an alternative or additional cause of
action for the purpose of recovery in the Eligible Currency or the Relevant
Currency, as the case may be, of the amount (if any) by which such effective
receipt shall fall short of the full amount of the Eligible Currency or the
Relevant Currency, as the case may be, payable hereunder, and shall not be
affected by judgment being obtained for any other sum due under this Agreement.

          Section 6.04. Payment to be made on Business Day. If any payment to be
made by the Borrower hereunder falls due on any day which is not a Business Day,
such payment shall be made on the immediately following Business Day and the
amount of interest shall be adjusted accordingly.

          Section 6.05. Borrower Acknowledgment. The Borrower hereby
acknowledges and agrees that any assignee of or a holder of a participation or
other interest in the JBIC Loan (including each of the JBIC Tranche B Funding
Source Banks) shall be entitled through the JBIC Agent and without duplication
to the rights and benefits under each of Sections 6.02, 12.01, 12.02, 12.03 and
12.04 of this Agreement and Sections 3.11, 3.12 and 12.21 of the Master
Participation Agreement, as if each such provision named, and operated directly
in favor, of such assignee or holder.

                                  ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

          Section 7.01. Representations and Warranties. The Borrower has given
certain representations and warranties set forth in Article VI of the Master
Participation Agreement. The rights of JBIC in respect of such representations
and warranties are set forth in the Master Participation Agreement and the
Master Security Agreement.

          Section 7.02. JBIC Environmental Guidelines. The Borrower represents
and warrants that except as disclosed in Annex I, as of the date hereof and as
of the Closing Date, the construction activities conducted in connection with
the Sulfide Project and the operations and properties of the Borrower are in
compliance with the JBIC Environmental Guidelines, except for any immaterial
issues of non-compliance of which the Borrower is not specifically aware and as
to which no remedial action has been requested by any applicable Governmental
Authority.


                                      -12-



                                  ARTICLE VIII

                                    COVENANTS

          Section 8.01. Master Participation Agreement Covenants. The Borrower
has undertaken certain covenants as set forth in Article VII of the Master
Participation Agreement. The rights of JBIC in respect of such covenants are set
forth in the Master Participation Agreement and the Master Security Agreement.

                                   ARTICLE IX

                     ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

          Section 9.01. Environmental and Social Considerations.

          (a) The Borrower shall construct the Sulfide Project and operate the
Business in compliance with the JBIC Environmental Guidelines. If, due to
unforeseen circumstances, the Borrower learns that it is not in compliance with
the JBIC Environmental Guidelines, the Borrower shall promptly report such
non-compliance to JBIC.

          (b) The Borrower shall implement and maintain an environmental
monitoring program which monitors the environmental compliance of the Borrower
and its Business in accordance with Section 7.23 of the Master Participation
Agreement. The Borrower shall, upon JBIC's reasonable request, report to JBIC on
measures and monitoring related to environmental and social considerations
(hereinafter referred to as the "ENVIRONMENTAL AND SOCIAL CONSIDERATIONS")
undertaken by the Borrower in connection with its compliance with the JBIC
Environmental Guidelines (including, to the extent applicable, on the results of
discussions with stakeholders of the Business held in accordance with clause (c)
below). Such report shall be in form and substance reasonably satisfactory to
JBIC and shall address, among other matters, measures taken by the Borrower with
respect to air pollution, water pollution and disposal of wastes as they relate
to the Business. From and after the date of Start-up of Commercial Production,
the Borrower shall provide an annual environmental compliance report, in the
form attached hereto as Annex D, by no later than March 31st of each year. The
Borrower shall provide promptly upon request such other items as may be
reasonably requested in writing from time to time by JBIC or the JBIC Agent with
respect to the Borrower's compliance with Applicable Environmental Laws and the
JBIC Environmental Guidelines.

          (c) If any problems regarding the Environmental and Social
Considerations arise, the Borrower shall make reasonable efforts for discussions
to be held between the Borrower and stakeholders of the Business (including, to
the extent applicable, local residents and local NGOs affected by the Project).

          (d) When the Government of the Republic of Peru (including local
governments) and other stakeholders of the Business have important roles to play
in terms of the Environmental and Social Considerations, the Borrower shall
endeavor to enter into agreements with such parties.


                                      -13-



          (e) If JBIC reasonably believes that the Borrower is not in compliance
with the JBIC Environmental Guidelines, JBIC or the JBIC Agent shall have the
right to notify the Borrower of the same and to request discussion with the
Borrower concerning such non-compliance. If, following discussion of such
non-compliance, JBIC continues to reasonably believe that the Borrower is not in
compliance with the JBIC Environmental Guidelines, JBIC shall have the right to
require that the Borrower permit JBIC, any environmental consultant chosen by
JBIC or any agent or representative thereof access to the Project Property, in
each case (i) at the expense of the Borrower and (ii) subject to the
confidentiality provisions set forth in Section 15.01.

          Section 9.02. Effect of Breach of Environmental and Social
Considerations. If the Borrower is in breach in any material respect of its
obligations under Section 9.01, then, after consultation between JBIC and the
Borrower, JBIC may send to the Borrower a notice of such breach (an "ALLEGED
BREACH NOTICE"). Thereafter, JBIC shall have the right to require that the
Borrower permit JBIC, any environmental consultant chosen by JBIC or any agent
or representative thereof access to the Project Property, (i) in each case at
the expense of the Borrower and (ii) subject to the confidentiality provisions
set forth in Section 15.01. If such breach remains uncured within ninety (90)
days after the receipt by the Borrower of an Alleged Breach Notice, JBIC or the
JBIC Agent may, by notice to the Borrower, declare that a JBIC Event of Default
has occurred in accordance with Section 10.01(c)(iii). Notwithstanding the
foregoing, the parties acknowledge that neither JBIC nor the JBIC Agent shall
have the right to declare the occurrence of a JBIC Event of Default, if the
Borrower has within such ninety (90) day period adopted a plan reasonably
acceptable to JBIC to cure such breach and thereafter diligently implements such
plan.

                                   ARTICLE X

                           EVENTS OF DEFAULT; REMEDIES

          Section 10.01. Events of Default. (a) Article IX of the Master
Participation Agreement is incorporated by reference herein as if fully set
forth herein in accordance with their terms, unless waived in accordance with
the Master Participation Agreement.

          (b) Upon the occurrence and Continuance of an MPA Event of Default,
JBIC shall have each of the rights and remedies provided in Article V of the
Master Security Agreement exercisable only pursuant and in accordance to the
terms thereof.

          (c) Each of the following events shall be a "JBIC EVENT OF DEFAULT"
under this Agreement:

               (i) if the SMM Concentrate Sales Agreement is terminated or
cancelled for any reason or amended, supplemented or otherwise modified to
reduce the quantity of minimum annual purchases thereunder or to reduce the term
thereof, and the same is not replaced within one hundred eighty (180) days with
equivalent arrangements acceptable to JBIC with customers in Japan;


                                      -14-



               (ii) if either SC or SMM is in breach of its obligations under
Section 2.01(c) of the Transfer Restrictions Agreement or the Sumitomo
Participant (or any Sumitomo Affiliate Transferee) makes or permits a Transfer
of its Restricted Common Stock that requires the prior written consent of JBIC
in accordance with Section 2.02(d) of the Transfer Restrictions Agreement
without the prior written consent of JBIC; or

               (iii) if at any time (i) JBIC shall declare the existence of a
JBIC Event of Default in accordance with the requirements of Section 9.02 or
(ii) the representation and warranty made by the Borrower under Section 7.02
shall prove to have been false when made in any material respect and is not
corrected or cured within ten (10) Business Days after notice from JBIC or the
JBIC Agent specifying such breach and requesting that it be remedied.

          Section 10.02. Consequences of JBIC Event of Default. Upon the
occurrence of a JBIC Event of Default pursuant to Section 10.01, JBIC or the
JBIC Agent (acting on behalf of JBIC) may, by notice to the Borrower, take the
following actions, so long as such actions are taken concurrently: (i) terminate
its commitment to make available the JBIC Facility and (ii) declare the JBIC
Loan then outstanding, together with accrued interest and any other charges
thereon, to be immediately due and payable.

                                   ARTICLE XI

                              CONDITIONS PRECEDENT

          Section 11.01. Conditions Precedent to Initial Disbursement. The
obligation of JBIC to make the initial JBIC Disbursement under this Agreement
shall be subject to (a) the fulfillment, in a manner satisfactory to JBIC, prior
to or concurrently with the making of such initial JBIC Disbursement, of the
conditions precedent set forth in Section 5.01 of the Master Participation
Agreement (or waiver thereof in accordance with Section 5.01 of the Master
Participation Agreement), which conditions are incorporated by reference herein
as if fully set forth herein; (b) the fulfillment of the conditions set out in
clause (1) of Annex A attached hereto (or waiver thereof by JBIC in accordance
with Section 5.01 of the Master Participation Agreement); and (c) with respect
to any JBIC Disbursement of Tranche B, the JBIC Agent shall have received the
corresponding portion of Tranche B from each JBIC Tranche B Funding Source Bank.

          Section 11.02. Conditions to Subsequent JBIC Disbursements. The
obligation of JBIC to make any JBIC Disbursement under this Agreement subsequent
to the initial JBIC Disbursement shall be subject to (a) the fulfillment, in a
manner satisfactory to the Requisite Lenders, prior to or concurrently with the
making of such JBIC Disbursement, of the conditions precedent set forth in
Section 5.02 of the Master Participation Agreement (or waiver thereof in
accordance with Section 5.02 of the Master Participation Agreement), which
conditions are incorporated by reference herein as if fully set forth herein;
(b) the fulfillment of the conditions set out in paragraph (1) of Annex A
attached hereto (or waiver thereof in accordance with Section 5.02 of the Master
Participation Agreement); and (c) with respect to any JBIC Disbursement of
Tranche B, the JBIC Agent shall have received the corresponding portion of
Tranche B from each JBIC Tranche B Funding Source Bank.


                                      -15-



                                   ARTICLE XII

                            TAXES, FEES AND EXPENSES

          Section 12.01. Indemnification for Taxes, Fees and Expenses. The
Borrower shall pay or cause to be paid and shall indemnify JBIC and the JBIC
Agent against:

          (a) Without duplication of the Borrower's obligations under Section
12.21 of the Master Participation Agreement, the Borrower agrees (i) to pay or
reimburse each of JBIC and the JBIC Agent for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the negotiation,
preparation, execution, delivery, waiver or modification of this Agreement and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, any documentary taxes and the reasonable
fees, disbursements and other charges of external counsel to each of JBIC and
the JBIC Agent, and (ii) to pay or reimburse each of JBIC and the JBIC Agent for
all its reasonable costs and expenses incurred in connection with any amendment,
supplement or modification to, or waiver in respect of this Agreement, or its
costs and expenses incurred in connection with the enforcement or preservation
of any rights under this Agreement, including, without limitation, the
reasonable fees, disbursements and other charges of external counsel, provided
in each case JBIC or the JBIC Agent shall first have provided the Borrower with
a receipt and supporting documentation certifying the amount of such costs and
expenses and that the relevant amounts shall be due and payable 30 days
thereafter. The agreements in this Section shall survive repayment of the
Advances, provided that no claims shall be made by JBIC or the JBIC Agent under
this Section after the first anniversary of the termination of this Agreement
and repayment of the Advances and all other amounts payable hereunder.
Notwithstanding the foregoing, and subject to Section 3.01 hereof, the Borrower
shall have no obligation to indemnify either JBIC or the JBIC Agent against any
losses, liabilities, obligations, damages, penalties, actions, judgments, suits,
costs, disbursements, or expenses arising out of the failure of JBIC or the JBIC
Agent, as the case may be, upon satisfaction of all conditions set forth in
Article XI, to disburse the amount required to be disbursed hereunder.

          (b) Without duplication of the Borrower's obligations under Section
12.21 of the Master Participation Agreement, the Borrower shall indemnify the
JBIC Agent and JBIC, and each Related Party of the JBIC Agent or JBIC (each an
"INDEMNITEE") from, and hold each Indemnitee harmless against, any and all
losses, claims, damages, liabilities and related expenses (other than Excluded
Taxes), including the reasonable and documented fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, the performance by the parties hereto
or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, (ii) the JBIC
Loan or the use of the proceeds therefrom or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of
whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are incurred by reason of the
negligence or willful misconduct of such Indemnitee; provided further that in
each case JBIC or the JBIC Agent shall first have provided the Borrower with a
certificate


                                      -16-



setting forth the amount of such losses, claims, damages, liabilities and
related expenses, together with reasonable evidence of payment therefore.

          Section 12.02. Relevant Currency. All amounts payable by the Borrower
under this Article XII in respect of any tax, duty, penalty, fee, expense,
charge, interest, loss, cost or liability shall be payable in the currency in
which such tax, duty, penalty, fee, expense, charge, interest, loss, cost or
liability is denominated or, if JBIC or the JBIC Agent shall so request, in any
other currency at the current exchange rate specified by JBIC or the JBIC Agent
(such denominated or other currency, the "RELEVANT CURRENCY").

                                  ARTICLE XIII

                         GOVERNING LAW AND JURISDICTION

          Section 13.01. GOVERNING LAW. IN ACCORDANCE WITH SECTION 5-1401 OF THE
NEW YORK GENERAL OBLIGATIONS LAW, THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          Section 13.02. Good Faith Consultation. The parties hereto undertake
to use good faith efforts to resolve any dispute arising out of or in connection
with this Agreement through consultation in good faith and mutual understanding,
provided that such consultation shall not prejudice the exercise of any right or
remedy of either party hereto by any such party in respect of any such dispute.

          Section 13.03. Submission to Jurisdiction. The provisions of Section
12.16 of the Master Participation Agreement are incorporated by reference herein
as if fully set forth herein.

          Section 13.04. WAIVER OF TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE ACTIONS OF ANY
OTHER PERSON PARTY HERETO OR THERETO IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.

                                   ARTICLE XIV

                                   JBIC AGENT

          Section 14.01. Appointment of JBIC Agent. JBIC hereby appoints
Sumitomo Mitsui Banking Corporation to act as JBIC's agent in connection
herewith, the Master Participation Agreement and any other related agreements to
which JBIC and the JBIC Agent are parties, and any other Financing Document and
authorizes the JBIC Agent to exercise such rights, powers and discretions as are
specifically delegated to the JBIC Agent by the terms hereof and thereof
together with all such rights, powers and discretions as are reasonably
incidental


                                      -17-



thereto. The Borrower hereby acknowledges that JBIC has irrevocably appointed
and authorized the JBIC Agent to act on its behalf in all matters related to
this Agreement, the Master Participation Agreement, the other Financing
Documents and any other related agreement to which JBIC and the JBIC Agent are
parties. The JBIC Agent shall be obligated to perform only those duties and
responsibilities specifically set out in this Agreement, any other Financing
Documents and any other related Agreement to which JBIC and the JBIC Agent are
parties, and the parties hereto agree that there shall be no implied covenants
or obligations arising under this Agreement or any other Financing Document on
the part of the JBIC Agent.

          Section 14.02. Tax Certification. The JBIC Agent shall, from time to
time following receipt of a written request therefor by the Borrower, furnish to
the Borrower a certification as to the fact that the JBIC Agent is "unrelated"
to the Borrower, in the form set forth in Annex F, and any other certification
as may be necessary under Peruvian law to qualify for a reduced rate of
withholding tax.

                                   ARTICLE XV

                                  MISCELLANEOUS

          Section 15.01. Confidentiality.

          (a) Each party to this Agreement shall maintain the confidentiality of
all information disclosed to it concerning this Agreement and the JBIC Facility
and shall, unless otherwise required by law, not voluntarily disclose it without
the prior written consent of the other parties hereto to anyone other than to
the directors, officers, employees, accountants, consultants, counsel and
representatives of the parties hereto, or any proposed transferee of the Tranche
B Loan with a reasonable need to know such information (provided, in the case of
such a proposed transferee or participant, that such transfer is permissible
under this Agreement and provided further, in a proposed transferee or
participant, the proposed transferee or participant, as the case may be, first
agrees in writing to be subject to this Section 15.01), except that this
provision shall not prevent the parties from disclosing information that (i)
becomes generally available to the public other than as a result of a disclosure
by such Person or its representatives in violation of this Agreement, (ii) is or
becomes available to such Person on a non-confidential basis from a source other
than the parties hereto when such source is entitled to make such disclosure or
(iii) subject to paragraph (c) below, is required to be disclosed in accordance
with any applicable Governmental Rule.

          (b) If such information is so disclosed to any Person, the disclosing
party agrees to instruct such Person to keep such information confidential.

          (c) If such information is required to be disclosed in accordance with
any applicable Governmental Rule, unless specifically prohibited by applicable
law or court order, the disclosing party shall, prior to disclosure thereof, use
its best efforts to notify the other parties hereto of any request for
disclosure of any such information (i) by any Governmental Authority (other than
any such request in connection with an examination of the financial condition of
any Senior Facility Lender) or (ii) pursuant to any legal process, so that in
each case the other parties


                                      -18-



hereto may seek an appropriate protective order to maintain the confidentiality
of such information.

          (d) The agreements in this Section 15.01 shall survive the termination
of this Agreement.

          Section 15.02. No Assignment; Funding. This Agreement shall be binding
upon and inure to the benefit of the Borrower, JBIC and their respective
successors and assigns; provided that the Borrower may not assign any or all of
its rights or obligations hereunder to any Person in any manner whatsoever
without the prior written consent of JBIC. The Borrower acknowledges and agrees
that the Tranche B Loan shall be provided only upon disbursement of the Tranche
B Loan Funds by the JBIC Tranche B Funding Source Banks.

          Section 15.03. No Waiver, Remedies Cumulative. No failure or delay in
exercising on the part of JBIC any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or further exercise thereof, or the exercise of any other right. No waiver
by JBIC hereunder shall be effective unless it is in writing. The rights and
remedies provided herein are cumulative and not exclusive of any other right or
remedy provided by law.

          Section 15.04. Partial Illegality. If at any time any provision hereof
becomes illegal, invalid or unenforceable in any respect under the laws of any
jurisdiction, neither the legality, validity nor enforceability of any other
provision hereof shall in any way be affected or impaired thereby.

          Section 15.05. Communications. Any notice, request, demand, consent,
designation, direction, instruction, certificate, report or other communication
to be given hereunder shall be given in the English language and will be duly
given when delivered in writing or sent by electronic mail confirmed by
facsimile transmission (with written confirmation of receipt, which confirmation
may be by facsimile transmission) (provided that a notice sent by electronic
mail shall be duly given only at the time the facsimile transmission confirming
the same is sent) or facsimile transmission (with written confirmation of
receipt, which confirmation may be by facsimile transmission) to a party at its
address and facsimile transmission numbers as indicated below or to such other
address as may be furnished for this purpose by such party (any such
communication that is not in writing shall be confirmed in writing):

If to the Borrower:     Sociedad Minera Cerro Verde S.A.A.
                        Asiento Minero Cerro Verde S/N
                        Uchumayo - Arequipa
                        Peru
                        Attention: General Manager
                        Telephone: (054) 283-363
                        Facsimile: (054) 283-376


                                      -19-



With a copy to PDC, at: Phelps Dodge Tower
                        1 North Central Avenue
                        Phoenix, Arizona 85004
                        U.S.A.
                        Attention: Treasurer
                        Telephone: (602) 366-8100
                        Facsimile: (602) 366-8150

If to JBIC:             Japan Bank for International Cooperation
                        4-1, Ohtemachi 1 - Chome
                        Chiyoda-ku
                        Tokyo, Japan 100 - 8144
                        Attention: Director, Division 1, Project Finance
                        Department
                        Telephone: +81-3-5218-3812
                        Facsimile: +81-3-5218-3976

If to the JBIC Agent:   Sumitomo Mitsui Banking Corporation
                        Structured Finance Department
                        1-2, Yurakucho 1 - Chome
                        Chiyoda-ku
                        Tokyo, Japan 100 - 0006
                        Attention: Credit Control & Administration Group
                        Telephone: +81-3-3592-8244
                        Facsimile: +81-3-3580-8432

or in each case to such other address as any party hereto may designate by
written notice to the other party hereto.

          Notices, requests, demands or other communications given or made as
aforesaid (i) by registered air mail shall be deemed to have been duly given or
made seven (7) Business Days after being deposited in the mails, and (ii) by
internationally recognized courier service or by facsimile shall be deemed to
have been duly given or made when the internationally recognized courier service
or facsimile or is duly received by the recipient.

          Section 15.06. Use of English Language. All documents to be furnished
or notices, requests or other communications to be given or made under this
Agreement shall, unless specified otherwise in this Agreement, be in the English
language or, if in another language, shall, if JBIC so requests, be accompanied
by a translation into English certified by a representative of the Borrower.

          Section 15.07. Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and assigns of the Borrower,
the JBIC Agent and JBIC,


                                      -20-



except that neither the Borrower nor the JBIC Agent may assign or otherwise
transfer all or any part of its rights or obligations under this Agreement
without the prior written consent of JBIC.

          Section 15.08. Further Assurances. The Borrower agrees to cooperate
with JBIC in connection with the exercise of any of its rights hereunder and
agrees, promptly upon request by JBIC or the JBIC Agent, to execute, acknowledge
and deliver all further instruments and documents, and take all such further
acts, consistent with legal and regulatory restrictions applicable to the
Borrower, as JBIC or the JBIC Agent may reasonably request from time to time in
order to carry out the purposes hereof or to enable JBIC to exercise and enforce
its rights and remedies hereunder.

          Section 15.09. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.

          Section 15.10. Abbreviation. This Agreement shall be referred to as
the "JBIC LOAN TO CERRO VERDE" in communications between the Borrower and JBIC,
as well as in relevant documents.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -21-



IN WITNESS WHEREOF, the Borrower, JBIC and the JBIC Agent, acting through their
duly authorized representatives, have caused this Agreement to be duly executed
as of the date first written above.

JAPAN BANK FOR INTERNATIONAL            SOCIEDAD MINERA CERRO VERDE S.A.A.:
COOPERATION:


By: /s/ Akira Ogawa                     By: /s/ Cristian Moran
    ---------------------------------       ------------------------------------
Name: Akira Ogawa                       Name: Cristian Moran
Title: Director General - Energy and    Title: Attorney in Fact
Natural Resources Finance Department


SUMITOMO MITSUI BANKING CORPORATION:


By: /s/ Takashi Shimahara
    ---------------------------------
Name: Takashi Shimahara
Title: Joint General Manager -
Structured Finance Department


                                      -22-



                                                                         ANNEX A

                             DISBURSEMENT PROCEDURES

          Unless otherwise agreed in writing by the parties to this Agreement,
JBIC Disbursements under this Agreement and the Master Participation Agreement
shall be made in accordance with the following procedures:

          1. REQUEST FOR DISBURSEMENT

          1.1 Simultaneously with the execution of this Agreement, the Borrower
shall deliver to JBIC and the JBIC Agent a proposed schedule of disbursement for
the JBIC Loan substantially in the form of Schedule 4 to this Annex A.

          1.2 The Borrower shall, at least fifteen (15) Business Days prior to
the intended date of Disbursement, submit to the JBIC Agent a duly completed
Request for Disbursement substantially in the form of Schedule 1 to this Annex A
signed by the Borrower and accompanied by a duly completed and signed Statement
of Expenditures substantially in the form of Schedule 2 to this Annex A.

          1.3 The Statement of Expenditures shall include the expenditures
already paid by the Borrower as Project Costs or estimated to be paid through
the relevant Disbursement Date. The Statement of Expenditures may also include
the expenditures that are scheduled to be paid by the Borrower during the ninety
(90) day period after the date of the relevant Statement of Expenditures (the
"Estimated Expenditures"), provided that should any Statement of Expenditures
include the Estimated Expenditures, the Borrower shall submit to the JBIC Agent
the revised relevant Statement of Expenditures promptly after such period.

          1.4 In the event that any expenditure shown in a Statement of
Expenditures is incurred in a currency other than the Eligible Currency, such
amounts shall be converted into the Eligible Currency at a rate of exchange
reasonably chosen by the Borrower and used by the Borrower for the preparation
of its financial statements, as set forth in the Statement of Expenditures.

          1.5 The Request for Disbursement and the Statement of Expenditures
shall be reviewed by the JBIC Agent as to its compliance with the provisions of
this Agreement. If the Request for Disbursement will result in breach of any
provision of this Agreement, the JBIC Agent, after consultation with JBIC, may
reject such Request for Disbursement.

          2. DISBURSEMENT

          2.1 Subject to the terms and conditions of this Agreement, including
without limitation, Sections 11.01 and 11.02 and this Annex A, the JBIC Agent
shall, upon its receipt, notify JBIC of the date and the amount of the requested
JBIC Disbursement in a Request for Disbursement. On each Disbursement Date
before the close of business in Tokyo, JBIC shall disburse the Tranche A Loans
to the JBIC Agent Tokyo Disbursement Account and on or prior



to 12:00 p.m., New York time, the JBIC Tranche B Funding Source Banks shall
disburse the Tranche B Loans into the JBIC Agent New York Disbursement Account
and the Disbursement Procedures set forth in Annex G (or such other procedures
as may be agreed by the parties from time to time) shall be observed, provided
that, if the said intended date of the JBIC Disbursement is not a Business Day,
such JBIC Disbursement shall be made on the immediately succeeding Business Day.

          2.2 Notwithstanding the foregoing, JBIC shall be deemed to have made a
JBIC Disbursement to the Borrower at the time when JBIC disburses the Tranche A
Loans to the JBIC Agent Tokyo Disbursement Account and the Tranche B Loans are
disbursed into the JBIC Agent New York Disbursement Account in accordance with
Section 2.1 and shall, as from the date of such disbursement, constitute a valid
and binding obligation upon the Borrower in respect of repayment of the
corresponding amount of the JBIC Loan and the payment of interest and any other
amount payable hereunder in relation thereto, each in accordance with and in the
manner contemplated by this Agreement.

          2.3 No more than one (1) JBIC Disbursement shall be made hereunder in
any calendar month period. In addition, no JBIC Disbursement shall be made
during any thirty (30) day period immediately preceding the date of payment of
commitment charges pursuant to Section 5.03.

          2.4 In the event that the total amount set forth in the Statement of
Expenditures with respect to any JBIC Disbursement is less than the amount of
the JBIC Disbursement requested in the relevant Request for Disbursement, then
the JBIC Disbursement shall be made only up to the amount set forth in such
Statement of Expenditures. Except with respect to the last JBIC Disbursement,
each JBIC Disbursement shall not be less than five hundred thousand Dollars
(U.S.$500,000).

          2.5 Promptly after the JBIC Disbursement is made, the JBIC Agent shall
(i) notify the Borrower of the date and amount of the Disbursement by sending
two (2) original copies of the Table of Disbursements (the "Table of
Disbursements") substantially in the form of Schedule 3 to this Annex A to the
Borrower and (ii) send a copy thereof to JBIC. The Borrower, promptly after
receipt thereof, shall (i) duly acknowledge and confirm such Table of
Disbursements and return one (1) original copy to the JBIC Agent and (ii) send a
copy thereof to JBIC.

          3. GENERAL

          On each day on which a JBIC Disbursement shall be made, the amount of
the Facility shall be reduced by the amount of such JBIC Disbursement.
Notwithstanding any provision of this Agreement to the contrary, JBIC shall not
be required to make any JBIC Disbursement hereunder if, as a result thereof, the
amount of the Facility would thereby be exceeded. JBIC Disbursements will be
made only during the Availability Period.


                                        2



                                                                      Schedule 1

                            Request for Disbursement
                         (Re: JBIC Loan to Cerro Verde)

                                                          Date: ________________
                                                          Serial No.: __________

Sumitomo Mitsui Banking Corporation, as JBIC Agent
[Address]

Attn: [Director]
      [Name of Department]

Dear Sirs:

          Pursuant to Section 1.2 of Annex A to the JBIC Loan Agreement dated
Ocotber 5th, 2005 among Japan Bank for International Cooperation, as Lender,
Sociedad Minera Cerro Verde S.A.A., as Borrower, and Sumitomo Mitsui Banking
Corporation, as JBIC Agent (the "JBIC Loan Agreement") (JBIC Loan to Cerro
Verde) (terms defined in the JBIC Loan Agreement (including those defined by
reference to the Master Participation Agreement referred to therein) have the
same meaning herein), we hereby request JBIC to disburse the amount specified
below.

Date of JBIC Disbursement: _______________

Disbursement Amount in the Eligible Currency: Tranche A [____________]
                                              Tranche B [____________]

          Please make a JBIC Disbursement of the above-mentioned amount by means
of a telegraphic transfer into the following account.

Bank Name/Branch Name: Sumitomo Mitsui Banking Corporation
Address of the Branch: ___________________________________
Account Name/Account Number: _____________________________
Reference: _______________________________________________
Attn: ____________________________________________________

          The current outstanding principal amount of the [JBIC Loan] excluding
the amount set forth in this Request for Disbursement is:

                           Tranche A: [____________]
                           Tranche B: [____________]

          We enclose the Statement of Expenditures specifying the
above-mentioned amount for the JBIC Disbursement.


                                        3



          We hereby certify (i) that no Default has occurred and is continuing
or would result from the making of such Disbursement (ii) that such JBIC
Disbursement is in accordance with the Table of Disbursements (attached hereto
as Schedule 3), (iii) that the proceeds of such JBIC Disbursement are (a) to be
used solely to pay expenditures (x) already paid by the Borrower as Project
Costs, (y) estimated to be paid through the relevant Disbursement Date, or (z)
that are scheduled to be paid by the Borrower as Project Costs during the ninety
(90) day period after the relevant Disbursement Date and (b) are necessary to
pay such Project Costs already paid, due or projected to become due within
ninety (90) days after such Requested Disbursement Date (other than in cases of
Punchlist Items on the final JBIC Disbursement), and (iv) that each of the
conditions precedent set forth in Section [5.01/5.02(1)] of the Master
Participation Agreement has been satisfied or waived.

                                        Yours faithfully,

                                        Sociedad Minera Cerro Verde S.A.A.


                                        ----------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

- ----------
(1)  This reference should be Section 5.01 in case of the initial disbursement
     and Section 5.02 in case of all subsequent disbursements.


                                        4



                                                                      Schedule 2

                            Statement of Expenditures
                         (Re: JBIC Loan to Cerro Verde)

                                                              Date: ____________
                                                              Serial No. _______

Sumitomo Mitsui Banking Corporation, as JBIC Agent
[Address]

Attn: [Director]
      [Name of Department]

Dear Sirs:

          Pursuant to Section 1.3 of Annex A to the JBIC Loan Agreement dated
September 30th, 2005 between Japan Bank for International Cooperation, as
Lender, Sociedad Minera Cerro Verde S.A.A., as Borrower and Sumitomo Mitsui
Banking Corporation, as JBIC Agent (the "JBIC Loan Agreement") (JBIC Loan to
Cerro Verde) (terms defined in the JBIC Loan Agreement (including those defined
by reference to the Master Participation Agreement referred to therein) having
the same meaning herein) and in relation to the disbursement requested to be
made on ____________, 20__, we hereby submit to you our Statement of
Expenditures.

                                        Yours faithfully,

                                        Sociedad Minera Cerro Verde S.A.A.


                                        ----------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                                                      Schedule 2

                            Statement of Expenditures
                           (JBIC Loan to Cerro Verde)



1               2             3                   4                 5                       6               7
- -------------   -----------   -----------------   ---------------   ---------------------   -------------   ------------------------
                Category of   Brief Description                     Amount in Currency of                   Amount in [ the Eligible
Name of Payee   Expenditure   of Payment          Date of Payment   Expenditure             Exchange Rate   Currency ]
- -------------   -----------   -----------------   ---------------   ---------------------   -------------   ------------------------
                                                                                          


                                                  (A)Total                                                              *
                                                  (B)Amount to be disbursed                                             *


                                        Sociedad Minera Cerro Verde S.A.A.

                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

Remarks:

*    Please insert the amount denominated in the Eligible Currency.



                                                                      Schedule 3

                                                      (JBIC Loan to Cerro Verde)
                                                         No. ___________________
                                                         Date: _________________

                             Table of Disbursements

                           (JBIC Loan to Cerro Verde)

Dear Sirs:

     We are sending herewith two (2) copies of the Table of Disbursements
concerning the captioned JBIC Loan.

     The said Table of Disbursements shall be conclusive and binding in the
absence of manifest error.

                                        Yours faithfully,

                                        Sumitomo Mitsui Banking Corporation,
                                        as JBIC Agent


                                        ----------------------------------------
                                        By:
                                            ------------------------------------
                                        Title:
                                               ---------------------------------

Acknowledged and confirmed
Sociedad Minera Cerro Verde S.A.A.


By
   -------------------------------------
   (authorized signature)



                                                      (Attachment to Schedule 3)

                    JAPAN BANK FOR INTERNATIONAL COOPERATION

                             TABLE OF DISBURSEMENTS
                          for JBIC Loan to Cerro Verde

                                                (Amounts expressed in _________)



   Date of                                           Outstanding Balance
    JBIC       Amount Disbursed   Amount Disbursed   (Total of Tranche A     Remarks as of
Disbursement       Tranche A          Tranche B         and Tranche B)      previous month
- ------------   ----------------   ----------------   -------------------   ----------------
                                                               

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------

- ------------   ----------------   ----------------   -------------------   ----------------
Total                                                                      as of this month




                                                           Schedule 4 to Annex A

                       JBIC Proposed Disbursement Schedule



                           Amount for               Amount for
Disbursement Date    Disbursement Tranche A   Disbursement Tranche B
- -----------------    ----------------------   ----------------------
                                        
November 2005                9,625,000               4,125,000
March 2006                  43,312,500              18,562,500
June 2006                   33,687,500              14,437,500
September 2006              43,312,500              18,562,500
January 2007                43,312,500              18,562,500
                           -----------              ----------
Total Amount U.S.$         173,250,000              74,250,000
                           ===========              ==========




                                                                         ANNEX B

                              Amortization Schedule



                     PERCENTAGE   PERCENTAGE   AMOUNT (U.S.$)   AMOUNT (U.S.$)
    PAYMENT NO.       TRANCHE A    TRANCHE B     TRANCHE A*       TRANCHE B*
    -----------      ----------   ----------   --------------   --------------
                                                    
1.                      6.25%        6.25%
2.                      6.25%        6.25%
3.                      6.25%        6.25%
4.                      6.25%        6.25%
5.                      6.25%        6.25%
6.                      6.25%        6.25%
7.                      6.25%        6.25%
8.                      6.25%        6.25%
9.                      6.25%        6.25%
10.                     6.25%        6.25%
11.                     6.25%        6.25%
12.                     6.25%        6.25%
13.                     6.25%        6.25%
14.                     6.25%        6.25%
15.                     6.25%        6.25%
16.                     6.25%        6.25%
Total Amount U.S.$       100%         100%


- ----------
*    To be inserted on the Availability Period End Date


                                      B-1



                                                                         ANNEX C

                              DISBURSEMENT ACCOUNTS

JBIC Agent New York Disbursement Account

Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: SMBCJPJT)
Reference: Payment for Cerro Verde
           (Attn : Capital Markets and Treasury Operations Department)
Account Bank: Sumitomo Mitsui Banking Corporation, New York Branch
Account Number: 895002

JBIC Agent Tokyo Disbursement Account

Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: SMBCJPJT)
Reference: Payment for Cerro Verde
           (Attn : Capital Markets and Treasury Operations Department)
Account Bank: JP Morgan Chase Bank, Tokyo Branch
Account Number: 0141503300

                               REPAYMENT ACCOUNTS

JBIC Agent New York Repayment Account
Account Name: Sumitomo Mitsui Banking Corporation, Tokyo (Swift: SMBCJPJT)
Reference: Payment for Cerro Verde
           (Attn : Capital Markets and Treasury Operations Department)
Account Bank: Sumitomo Mitsui Banking Corporation, New York Branch
Account Number: 895002

JBIC New York Repayment Account
Account Name: Japan Bank for International Cooperation
Reference: Cerro Verde
Account Bank: Bank of Tokyo-Mitsubishi Trust Company
Account Number: 26019442


                                      C-1



                                                                         ANNEX D

                          Environmental Monitoring Form
                           (JBIC Loan to Cerro Verde)

                                                           Date: _______________

To:  Japan Bank for International Cooperation
     4-1, Ohtemachi 1-chome
     Chiyoda-ku, Tokyo 100-8144, Japan
     Attn: Director General
     Energy and Natural Resources Finance Department

     Dear Sirs:

     As required by Section 9.01(b) of the JBIC Loan Agreement dated September
     30th, 2005 between Japan Bank for International Cooperation, as Lender,
     Sociedad Minera Cerro Verde S.A.A., as Borrower, and Sumitomo Mitsui
     Banking Corporation, as JBIC Agent (JBIC Loan to Cerro Verde), please find
     enclosed the environmental monitoring form prepared by the Borrower for the
     year ended on December 31, [____].

     In addition, except as disclosed below, we hereby certify that, as of the
     date hereof, the Borrower is not aware of any violation of the JBIC
     Environmental Guidelines.

                                        Yours faithfully,


                                        ----------------------------------------


                                      D-1



                          ENVIRONMENTAL MONITORING FORM

1. WATER QUALITY (SURFACE WATER; CHILI RIVER, WATER INTAKE POINT)



                                                  EFFLUENT LIMITATIONS
                           MEASURED    MEASURED   --------------------     REMARKS
                            VALUE       VALUE       MAXIMUM   AVERAGE     (FREQUENCY,
    ITEM         UNIT     (AVERAGE)   (MAXIMUM)      DAILY    MONTHLY    METHOD, ETC.)
    ----      ---------   ---------   ---------     -------   -------    -------------
                                                       
pH            -
EC            mS/cm
Temperature   degrees C
Acidity       mg/L                                                          (CaCO3)
Alkalinity    mg/L
TDS           mg/L
TSS           mg/L


2. WATER QUALITY (GROUNDWATER; DOWNSTREAM OF WASTE ROCK DUMP PLACE)



                            MEASURED    MEASURED                           REMARKS
                             VALUE       VALUE          REFERRED         (FREQUENCY,
    ITEM          UNIT     (AVERAGE)   (MAXIMUM)   STANDARDS/CRITERIA   METHOD, ETC.)
    ----       ---------   ---------   ---------   ------------------   -------------
                                                         
Water Level
pH             -
DO
EC             mS/cm
Temperature    degrees C
Acidity        mg/L                                                        (CaCO3)
Alkalinity     mg/L
TDS            mg/L
TSS            mg/L
Total Metals   mg/L
Sulfates       mg/L


3. WATER QUALITY (GROUNDWATER; DOWNSTREAM OF TAILINGS DAM)



                              MEASURED    MEASURED                           REMARKS
                               VALUE       VALUE          REFERRED         (FREQUENCY,
     ITEM           UNIT     (AVERAGE)   (MAXIMUM)   STANDARDS/CRITERIA   METHOD, ETC.)
     ----        ---------   ---------   ---------   ------------------   -------------
                                                           
Water Level
pH               -
DO
EC               mS/cm
Temperature      degrees C
Acidity          mg/L                                                        (CaCO3)
Alkalinity       mg/L
TDS              mg/L
TSS              mg/L
Total Metals     mg/L
Total Nutrient   mg/L



                                       1



                                                                         ANNEX E

                    JAPAN BANK FOR INTERNATIONAL COOPERATION

                         GUIDELINES FOR CONFIRMATION OF
                     ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

                                   APRIL 2002

                    JAPAN BANK FOR INTERNATIONAL COOPERATION



PREFACE

Japan Bank for International Cooperation (hereinafter referred to as "JBIC")
establishes and makes public "JBIC Guidelines for Confirmation of Environmental
and Social Considerations" (hereinafter referred to as the "Guidelines") with
the objective of contributing to efforts by the international community,
particularly developing regions, towards sustainable development, through
consideration of the environmental and social aspects in all projects
(hereinafter referred to as "project" or "projects") subject to lending or other
financial operations (hereinafter collectively referred to as "funding") by
JBIC. Environmental and social considerations refer not only to the natural
environment, but also to social issues such as involuntary resettlement and
respect for the human rights of indigenous peoples (hereinafter collectively
referred to as "environment"). The Guidelines apply commonly to JBIC's
International Financial Operations and Overseas Economic Cooperation Operations.

The Guidelines have been formulated on the basis of Japan's approach to
international co-operation in environmental conservation, discussions about the
international framework on environmental and social considerations and human
rights, and discussions held at the Organisation for Economic Co-Operation and
Development (OECD) regarding common approaches to the environment and public
export credits, which requires consistency between public export credit policies
and environmental conservation policies, and also regarding good environmental
practices of the Development Assistance Committee (DAC) and other issues. The
Guidelines will be reviewed as necessary in future, taking into account future
progress made in these areas.

While encouraging appropriate consideration of the environment and social
aspects in projects subject to funding, it is JBIC's policy to provide active
support to projects that promote environmental conservation and to projects that
contribute to the protection of the global environment, such as projects to
reduce greenhouse gas emissions. JBIC also has a policy of being actively
involved in the support of enhancing environmental and social considerations in
developing countries.


                                       2



GUIDELINES

                                    Contents



                                                                                                 Page
                                                                                                 ----
                                                                                              
Part 1

1. JBIC's Basic Policies Regarding Confirmation of Environmental and Social Considerations ...     3
2. Objectives and Meaning of the Guidelines ..................................................     4
3. Basic Principles Regarding Confirmation of Environmental and Social Considerations ........     4
4. Procedures for Confirmation of Environmental and Social Considerations ....................     6
5. Disclosure of Information Regarding Confirmation of Environmental and Social
   Considerations by JBIC ....................................................................     9
6. Taking Environmental Reviews into Account for Decision-making and Loan Agreements .........    11
7. Ensuring Appropriate Implementation of and Compliance with the Guidelines .................    11
8. Implementation and Review of the Guidelines ...............................................    12

Part 2(NB)

1. Environmental and Social Considerations Required for Funded Projects ......................    13
2. EIA Reports for Category A Projects .......................................................    17
3. Illustrative List of Sensitive Sectors, Characteristics and Areas .........................    20
4. Information Required for Screening Process ................................................    22
5. Checklist Categories and Items ............................................................    23
6. Items Requiring Monitoring ................................................................    24


(NB):  Part 2 is inseparable from Part 1.


                                       3



[PART 1]

1. JBIC'S BASIC POLICIES REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS

JBIC confirms that project proponents are undertaking appropriate environmental
and social considerations, through various measures, so as to prevent or
minimize the impact on the environment and local communities which may be caused
by the projects for which JBIC provides funding, and not to bring about
unacceptable effects. It will thus contribute to the sustainable development of
developing regions.

In its confirmation of environmental and social considerations, JBIC places
importance on dialogue with the host country (including local governments),
borrowers and project proponents (hereinafter collectively referred to as
"borrowers and related parties") regarding environmental and social
considerations, while respecting the sovereignty of the host country. It also
takes note of the importance of transparent and accountable processes, as well
as the participation in those processes of stakeholders in the project
concerned, including local residents and local NGOs affected by the project
(hereinafter referred to as "stakeholders"). JBIC makes clear in its Guidelines
the environmental and social considerations required for projects to receive
JBIC's funding, and confirms those environmental and social considerations.

In making its funding decisions, JBIC conducts screenings and reviews of
environmental and social considerations to confirm that the requirements are
duly satisfied.

JBIC makes the utmost efforts to ensure that appropriate environmental and
social considerations are undertaken, in accordance with the nature of the
project for which JBIC provides funding, as stated in the Guidelines, through
such means as loan agreements.

Following funding decisions, if necessary, JBIC will monitor or take steps over
a certain period of time to encourage borrowers and related parties to ensure
that appropriate environmental and social considerations are undertaken.

In cases where it is involved in the planning and preparatory stages of a
project, JBIC will take steps to encourage borrowers and related parties to
undertake appropriate environmental and social considerations from the earliest
stage possible.


                                       1



JBIC consistently strives to improve its organizational structure and
operational capacity to achieve sufficient and effective confirmation of
environmental and social considerations.

2. OBJECTIVES AND MEANING OF THE GUIDELINES

The objective of the Guidelines is to encourage project proponents to implement
appropriate environmental and social considerations in accordance with the
Guidelines, by making clear its procedures (both before and after funding
decisions are made), criteria for decision-making and requirements which
projects subject to funding are to meet. In so doing, JBIC endeavors to ensure
transparency, predictability and accountability in its confirmation of
environmental and social considerations.

3. BASIC PRINCIPLES REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS

(1) Parties Responsible for Environmental and Social Considerations The project
proponents are responsible for environmental and social considerations for the
project. JBIC confirms such considerations in light of the Guidelines. JBIC
encourages project proponents seeking funding from JBIC to undertake appropriate
environmental and social considerations in accordance with the nature of the
project, based on the principles listed in Section 1 of Part 2 of the
Guidelines.

(2) Confirmation of Environmental and Social Considerations by JBIC. JBIC does
the following to confirm environmental and social considerations;

(a)  classifies the project into one of the categories listed in Section 4.(2)
     of Part 1 (hereinafter referred to as "screening");

(b)  conducts a review of environmental and social considerations when making a
     decision on funding, to confirm that the requirements are duly satisfied
     (hereinafter referred to as "environmental review"); and

(c)  conducts monitoring and follow-up after the decision has been made on
     funding (hereinafter, such monitoring and follow-up processes will be
     simply referred to as "monitoring").

JBIC conducts screening and environmental reviews of projects for which it
intends to provide funding before it makes decisions on funding.

In light of the Guidelines and taking into account the characteristics of the
project and the particular circumstances of the country and its location, JBIC
confirms in its environmental reviews: 1) whether appropriate and sufficient
consideration is given to environmental and social issues before the
implementation of the project, 2) whether appropriate environmental and social
considerations can be expected after JBIC makes decisions on the funding of the
project in light of such factors as the state of preparation by the project
proponent and host government, their experience, operational capacity, and the
state of securing funds, as well as external factors of instability.

From the standpoint that confirmation of environmental and social considerations
is an important aspect in the risk assessment for the funding, JBIC carries out
environmental reviews in strict


                                       2



conjunction with its financial, economic and technical review of projects.

As well as undertaking efficient pre-funding screening and environmental reviews
through the appropriate use of "screening forms" and "environmental checklists",
amongst other means, JBIC places emphasis on post-funding monitoring.

(3) Information Required for Confirmation of Environmental and Social
Considerations JBIC conducts screening and environmental reviews based
principally on information provided by borrowers and related parties (in the
case of export finance, including exporters). However, JBIC may request
additional information from the borrowers and related parties when necessary.

JBIC recognizes the importance of information received not only from the
borrowers and related parties but also from governments and organizations of
host countries, co-financiers and stakeholders, and utilizes such information in
its screening and environmental reviews.

With respect to projects that are co-financed by other financial institution(s),
JBIC endeavors to exchange information on environmental and social
considerations with the other institution(s) concerned.

For Category A projects (see Section 4.(2) of Part 1), JBIC checks the extent of
stakeholder participation and information disclosure being undertaken for the
project, in accordance with the environmental impact assessment systems of the
host country.

JBIC may, when necessary, conduct surveys of proposed project sites by
dispatching environmental experts to confirm environmental and social
considerations.

JBIC may, when necessary, seek and make use of opinions from outside experts.

(4) Standards for Confirmation of Appropriateness of Environmental and Social
Considerations

JBIC in principle conducts environmental reviews to confirm that projects meet
the requirements for environmental and social considerations stated in the
Guidelines in the following ways: JBIC ascertains whether a project complies
with environmental laws and standards, of the host national and local
governments concerned, as well as whether it conforms to their environmental
policies and plans.

JBIC also uses, as reference points or benchmarks, examples of standards and/or
good practices regarding environmental and social considerations established by
international and regional organizations and developed countries such as Japan.
If JBIC believes the environmental and social considerations of the project
substantially deviate from these standards and good practices, it will consult
with the host governments (including local governments), borrowers and project
proponents to confirm the background and rationale for this deviation.

JBIC takes note of the importance of good governance with regard to projects for
the sake of appropriate environmental and social considerations.

(5) Taking into Account for Funding Decisions

JBIC takes the outcomes of its environmental reviews into account for decisions
on funding. If, as a result of its environmental review, JBIC judges that
appropriate environmental and social considerations are not ensured, it will
encourage the project proponent, through the borrower, to undertake appropriate
environmental and social considerations. If appropriate environmental and social
considerations are not undertaken, there may be cases where funding is not
extended.


                                       3



4. PROCEDURES FOR CONFIRMATION OF ENVIRONMENTAL AND SOCIAL CONSIDERATIONS

(1) Screening

Before starting an environmental review of a project, JBIC classifies the
project into one of the following categories. The subsequent environmental
review will then be conducted in accordance with the procedures for that
category.

JBIC requests the borrowers and related parties to submit the necessary
information promptly so that it may perform the screening process at an early
stage.

During the screening process, JBIC classifies each project in terms of its
potential environmental impact, taking into account such factors as: the sector
and scale of the project, the substance, degree and uncertainty of its potential
environmental impact and the environmental and social context of the proposed
project site and surrounding areas.

JBIC may revise the categorization when necessary, e.g., in cases where
environmental impact worth considering comes to light even after the screening
based on the information provided by the borrowers and related parties is
performed.

(2) Categorization

Category A: A proposed project is classified as Category A if it is likely to
have significant adverse impact on the environment. A project with complicated
impact or unprecedented impact which are difficult to assess is also classified
as Category A. The impact of Category A projects may affect an area broader than
the sites or facilities subject to physical construction. Category A, in
principle, includes projects in sensitive sectors (i.e., sectors that are liable
to cause adverse environmental impact) or with sensitive characteristics (i.e.,
characteristics that are liable to cause adverse environmental impact) and
projects located in or near sensitive areas. An illustrative list of sensitive
sectors, characteristics and areas is given in Section 3 of Part 2.

Category B: A proposed project is classified as Category B if its potential
adverse environmental impact is less adverse than that of Category A projects.
Typically, this is site-specific, few if any are irreversible, and in most cases
normal mitigation measures can be designed more readily. Projects funded by
Engineering Service Loans that are yen loans for survey and design, are
classified as Category B, with the exception of those belonging to Category C.

Category C: A proposed project is classified as Category C if it is likely to
have minimal or no adverse environmental impact. Projects that correspond to one
of the following are, in principle, classified as Category C, with the exception
of projects with sensitive characteristics and projects located in sensitive
areas as indicated in Section 3 of Part 2:

     1) Projects for which the JBIC's share is not above SDR 10 million;

     2) Sectors or projects in which no particular environmental impact would be
     normally expected (e.g., human resources development, support for
     international balance of payments, maintenance of existing facilities,
     acquisition of rights and interests without additional capital investment);
     or

     3) Cases in which there is only minor involvement of the project by the
     borrower or JBIC, such as the export/import or lease of items of machinery
     or equipment that is not connected with a particular project, and where
     there would be little reasonable significance in JBIC's conducting an
     environmental review.


                                       4



Category FI: A proposed project is classified as Category FI if it satisfies all
of the following: JBIC's funding of the project is provided to a financial
intermediary etc.; the selection and assessment of the actual sub-projects is
substantially undertaken by such an institution only after JBIC's approval of
the funding and therefore the sub-projects cannot be specified prior to JBIC's
approval of funding (or assessment of the project); and those sub-projects are
expected to have potential impact on the environment.

(3) Environmental Review for Each Category

After the screening process, JBIC carries out environmental reviews according to
the following procedures for each category.

Category A: Environmental reviews for Category A projects examine the potential
negative and positive environmental impact of projects. JBIC evaluates measures
necessary to prevent, minimize, mitigate or compensate for potential negative
impact, and measures to promote positive impact if any such measures are
available. Borrowers and related parties must submit Environmental Impact
Assessment (EIA) reports (see Section 2 of Part 2) for Category A projects. For
projects that will result in large-scale involuntary resettlement, basic
resettlement plans must be submitted. JBIC undertakes its environmental reviews
based on the EIA and other reports prepared by the project proponents and
submitted through the borrower.

Category B: The scope of environmental reviews for Category B projects may vary
from project to project, but it is narrower than that for Category A projects.
The environmental reviews for Category B are similar to that of category A in
that they examine potential negative and positive environmental impact and
evaluate measures necessary to prevent, minimize, mitigate or compensate for the
potential negative impact, and measures to promote positive impact if any such
measures are available. JBIC undertakes its environmental reviews based on
information provided by borrowers and related parties. Where an EIA procedure
has been conducted, the EIA report may be referred to, but this is not a
mandatory requirement.

Category C: For projects in this category, environmental reviews will not
proceed beyond screening.

Category FI: JBIC checks through the financial intermediary etc. to see whether
appropriate environmental and social considerations as stated in the Guidelines
are ensured for projects in this category.

The corresponding environmental checklists for each sector will be referred to
in conducting the aforementioned reviews.

(4) Monitoring

JBIC in principle confirms through the borrower over a certain period of time,
the results of monitoring the items which have a significant environmental
impact by the project proponents. This is in order to confirm the project
proponents' undertaking of environmental and social considerations for category
A and B projects.

The information necessary for monitoring by JBIC needs to be supplied by the
borrowers and related parties by appropriate means. When necessary, JBIC may
also conduct its own investigations. When third parties point out in concrete
terms that environmental and social considerations are not being fully
undertaken, JBIC forwards such claims to the borrowers and, if necessary,
encourages them to request the project proponents to take appropriate action. In
the project proponents' response


                                       5



to the claim, JBIC confirms that they carry out the investigation of the
specific claim, the examination of countermeasures, and their incorporation into
the project plans through transparent and accountable processes.

Also, when necessary, JBIC may request the cooperation of the borrowers and
related parties in conducting its own investigations to confirm the state of
undertaking of environmental and social considerations.

If JBIC judges that there is a need for improvement in the situation with
respect to environmental and social considerations, it may ask the project
proponent, through the borrower, to take appropriate action in accordance with
the loan agreement. If the response of the project proponent is inappropriate,
JBIC may consider taking its own actions in accordance with the loan agreement,
including the suspension of the disbursement.

5. DISCLOSURE OF INFORMATION REGARDING CONFIRMATION OF ENVIRONMENTAL AND SOCIAL
CONSIDERATIONS BY JBIC

(1) Basic Principles

JBIC welcomes information provided by concerned organizations and stakeholders,
so that it may consider a diverse range of opinions and information in its
environmental reviews and supervision of projects. In order to encourage
concerned organizations and stakeholders to provide information to JBIC at an
early stage and to ensure its accountability and transparency in the
environmental review process, JBIC makes available, important information on
environmental reviews in ways appropriate to the nature of the project, while
the environmental review is in progress. JBIC may also, when necessary, seek the
opinions of concerned organizations and stakeholders.

In addition to the aforementioned principles, if requested by third parties,
JBIC will provide them with information regarding environmental and social
considerations within its capacity to do so.

JBIC respects the confidentiality of the commercial and other matters of the
borrowers and related parties, and observes concurrently the principles of
information disclosure and such confidentiality.

(2) Timing of Disclosure and Content of Disclosed Information

Prior to making decisions on funding and depending on the nature of the project,
JBIC discloses information in principle at the timing and with the contents
listed below. JBIC endeavors to disclose information in a manner that allows
enough time before decisions are made on funding:

     -    Upon completion of the screening of a project, JBIC discloses, as soon
          as possible, the project name, country, location, an outline and
          sector of the project, and its category classification, as well as the
          reasons for that classification; and

     -    For Category A and Category B projects, JBIC publishes the status of
          major documents on environmental and social considerations by the
          borrowers and related parties, such as EIA reports and environmental
          permit certificates, etc. issued by the host government on the JBIC
          website, and promptly makes available the EIA reports etc.

After executing a loan agreement, JBIC provides the results of its environmental
reviews of projects in Categories A, B and FI for public perusal on the JBIC
website.

JBIC pays due consideration to the confidentiality of the commercial and other
matters of the borrowers and related parties, taking into account their
competitive relationships, and encourages


                                       6



them to exclude such confidential information from any documents on
environmental considerations submitted by them that may later be subject to
public disclosure. Any information that is prohibited from public disclosure in
the agreement between JBIC and the borrower may be disclosed only with either
the agreement of the borrowers and related parties or in accordance with legal
requirements.

6. TAKING ENVIRONMENTAL REVIEWS INTO ACCOUNT FOR DECISION-MAKING AND LOAN
AGREEMENTS

JBIC takes the results of environmental reviews into account for its
decision-making on funding. If JBIC considers that a project is likely to have
an adverse impact on the environment due to inappropriate environmental and
social considerations, it will encourage, through the borrower the project
proponent to undertake appropriate environmental and social considerations. If
appropriate environmental and social considerations are not undertaken, JBIC may
decide not to extend funding.

JBIC will make its utmost effort to ensure that the following requirements are
met through loan agreements or their attached documents, when it is considered
necessary to ensure the enforcement of environmental and social considerations
by borrowers and related parties:

- -    The borrower is to report to JBIC on measures and monitoring related to
     environmental and social considerations undertaken by the project
     proponents. If, due to unforeseen circumstances, there is a possibility
     that the requirements for environmental and social consideration may not be
     fulfilled, the borrower is to report this to JBIC;

- -    If any problems regarding environmental and social considerations arise,
     the borrower is to make efforts for discussions to be held between the
     project proponents and project stakeholders;

- -    When project proponents and the host governments (including local
     governments) other than the borrower have important roles to play in terms
     of environmental and social considerations, the borrower is to endeavor to
     enter into agreements with these arties as well; and

- -    If it becomes evident that the borrower and the project proponents have not
     met the conditions required by JBIC under the Guidelines, or if it becomes
     apparent that the project will have an adverse impact on the environment
     after funding is extended, due to the borrower's or related parties'
     failure to supply correct information during the environmental review
     process, JBIC may, in accordance with the loan agreement, suspend the
     disbursement or declare all the principal outstanding at the time, with
     interest and any other charges thereon, to be payable immediately.

7. ENSURING APPROPRIATE IMPLEMENTATION OF AND COMPLIANCE WITH THE GUIDELINES

JBIC endeavors to ensure appropriate implementation of the policies and
procedures stated in the Guidelines and compliance with the Guidelines. In order
to ensure its compliance with the Guidelines, JBIC accepts objections regarding
its non-compliance with the Guidelines and takes the necessary actions.

8. IMPLEMENTATION AND REVIEW OF THE GUIDELINES

JBIC verifies the status of the implementation of the Guidelines, and, based on
its findings, conducts a comprehensive review of the Guidelines within five (5)
years of their enforcement. Revisions may then be made as needed. When making
revisions, JBIC will seek the opinions of the Japanese Government, the
governments of developing countries, Japanese companies, experts, NGOs etc.,


                                       7



while maintaining transparency in the process.

These Guidelines will come into force from October 1, 2003. The "Environmental
Guidelines for JBIC International Financial Operations" and "JBIC Environmental
Guidelines for ODA Loans" will apply to projects for which loan applications
have essentially been made before the enactment of these Guidelines.

N.B.: If there is any ambiguity in English version and/or any inconsistency with
Japanese version, the Japanese version prevails.


                                       8



PART 2.

1. ENVIRONMENTAL AND SOCIAL CONSIDERATIONS REQUIRED FOR FUNDED PROJECTS

In principle, appropriate environmental and social considerations are
undertaken, according to the nature of the project, based on the following:

(Underlying Principles)

- -    Environmental impact which may be caused by a project must be assessed and
     examined from the earliest planning stage possible. Alternative proposals
     or minimization measures to prevent or reduce adverse impact must be
     examined and incorporated into the project plan:

- -    Such examination must include analysis of environmental costs and benefits
     in as quantitative terms as possible and be conducted in close harmony with
     economic, financial, institutional, social and technical analysis of the
     project;

- -    The findings of the examination of environmental and social considerations
     must include alternative proposals, mitigation measures and be recorded as
     separate documents or as a part of other documents. Environmental Impact
     Assessment (EIA) reports must be produced for projects in which there is a
     reasonable expectation of particularly large adverse environmental impact;
     and

- -    For projects that have particularly large potential adverse impact or are
     highly contentious, a committee of experts may be formed to seek their
     opinions, in order to increase accountability.

(Examination of Measures)

- -    Multiple alternative proposals must be examined to prevent or minimize
     adverse impact and to choose a better project option in terms of
     environmental and social considerations. In examination of measures,
     priority is to be given to the prevention of environmental impact, and when
     this is not possible, minimization and reduction of impact must be
     considered next. Compensation measures must be examined only when impact
     cannot be prevented by any of the aforementioned measures; and

- -    Appropriate follow-up plans and systems, such as monitoring plans and
     environmental management plans, must be prepared; and costs of implementing
     such plans and systems, and financial methods to fund such costs, must be
     determined. Plans for projects with particularly large potential adverse
     impact must be accompanied by detailed environmental management plans.

(Scope of Impact to be Examined)

- -    Environmental impact to be investigated and examined includes factors that
     impact human health and safety as well as the natural environment, such as:
     air, water, soil, waste, accidents, water usage, ecosystems, and biota.
     Social concerns include: involuntary resettlement of the population, the
     indigenous people, cultural heritage, landscape, gender, children's rights
     and communicable diseases such as HIV/AIDS and impact that may lead to
     trans-boundary and global environmental problems; and


                                       9



- -    In addition to the direct and immediate impact of projects, derivative,
     secondary and cumulative impact are also to be examined and investigated to
     a reasonable extent. It is also desirable that the impact which can occur
     at any time during the duration of the project be continuously considered
     throughout the life cycle of the project.

(Compliance with Laws, Standards and Plans)

- -    Projects must comply with laws, ordinances and standards relating to
     environmental and social considerations established by the governments that
     have jurisdiction over the project site (including both national and local
     governments). They are also to conform to environmental and social
     consideration policies and plans of the governments that have jurisdiction
     over the project site; and

- -    Projects must, in principle, be undertaken outside protected areas that are
     specifically designated by laws or ordinances of the government for the
     conservation of nature or cultural heritage (excluding projects whose
     primary objectives are to promote the protection or restoration of such
     designated areas). Projects are also not to impose significant adverse
     impact on designated conservation areas.

(Social Acceptability and Social Impacts)

Project must be adequately coordinated so that they are accepted in a manner
that is socially appropriate to the country and locality in which the project is
planned. For projects with a potentially large environmental impact, sufficient
consultations with stakeholders, such as local residents, must be conducted via
disclosure of information from an early stage where alternative proposals for
the project plans may be examined. The outcome of such consultations must be
incorporated into the contents of the project plan; and

- -    Appropriate consideration must be given to vulnerable social groups, such
     as women, children, the elderly, the poor and ethnic minorities, all of
     whom are susceptible to environmental and social impact and who may have
     little access to the decision-making process within society.

(Involuntary Resettlement)

- -    Involuntary resettlement and loss of means of livelihood are to be avoided
     where feasible, exploring all viable alternatives. When, after such
     examination, it is proved unfeasible, effective measures to minimize impact
     and to compensate for losses must be agreed upon with the people who will
     be affected;

- -    People to be resettled involuntarily and people whose means of livelihood
     will be hindered or lost must be sufficiently compensated and supported by
     the project proponents, etc. in timely manner. The project proponents, etc.
     must make efforts to enable the people affected by the project, to improve
     their standard of living, income opportunities and production levels, or at
     least to restore them to pre-project levels. Measures to achieve this may
     include: providing land and monetary compensation for losses (to cover land
     and property losses), supporting the means for an alternative sustainable
     livelihood, and providing the expenses necessary for relocation and the
     re-establishment of a community at relocation sites; and

- -    Appropriate participation by the people affected and their communities must
     be promoted in planning, implementation and monitoring of involuntary
     resettlement plans and measures against the loss of their means of
     livelihood.


                                       10



(Indigenous Peoples)

- -    When a project may have adverse impact on indigenous peoples, all of their
     rights in relation to land and resources must be respected in accordance
     with the spirit of the relevant international declarations and treaties.
     Efforts must be made to obtain the consent of indigenous peoples after they
     have been fully informed.

(Monitoring)

- -    It is desirable that, after a project begins, the project proponents
     monitor: (i) whether any situations that were unforeseeable before the
     project began have arisen, (ii) the implementation situation and the
     effectiveness of the mitigation measures prepared in advance, and that they
     then take appropriate measures based on the results of such monitoring;

- -    In cases where sufficient monitoring is deemed essential for the
     achievement of appropriate environmental and social considerations, such as
     the projects for which mitigation measures should be implemented while
     monitoring their effectiveness, project proponents must ensure that project
     plans include monitoring plans which are feasible;

- -    It is desirable that project proponents make the results of the monitoring
     process available to project stakeholders; and

- -    When third parties point out, in concrete terms, that environmental and
     social considerations are not being fully undertaken, it is desirable that
     a forum for discussion and examination of countermeasures be established
     based on sufficient information disclosure and include the participation of
     stakeholders in the relevant project. It is also desirable that an
     agreement be reached on procedures to be adopted with a view to resolving
     the problem.

2. EIA REPORTS FOR CATEGORY A PROJECTS

The following conditions are met in principle:

- -    When assessment procedures already exist in host countries, and projects
     are subject to such procedures, borrowers and related parties must
     officially complete those procedures and obtain the approval of the
     government of the host country;

- -    EIA reports (which may be referred to differently in different systems)
     must be written in the official language or a language widely used in the
     country where the project is to be implemented. When explaining projects to
     local residents, written materials must be provided in a language and form
     understandable to them;

- -    EIA reports are required to be made available in the country and to the
     local residents where the project is to be implemented. The EIA reports are
     required to be available at all times for perusal by project stakeholders
     such as local residents and that copying be permitted;

- -    In preparing EIA reports, consultation with stakeholders, such as local
     residents, must take place after sufficient information has been disclosed.
     Records, etc. of such consultations must be prepared;

- -    Consultations with relevant stakeholders, such as local residents, should
     take place if necessary throughout the preparation and implementation
     stages of a project. Having consultations is


                                       11



     highly desirable, especially when the items to be considered in the EIA are
     being selected, and when the draft report is being prepared; and

- -    It is desirable that EIA reports cover the items enumerated in the Appendix
     hereto.

2. APPENDIX

     ILLUSTRATIVE ENVIRONMENTAL IMPACT ASSESSMENT REPORT FOR CATEGORY A PROJECTS
NB An EIA's scope and level of detail should be decided in accordance with the
project's potential impacts. The EIA report should include the following items
(not necessarily in the order shown):

- -    Executive Summary: concisely discusses significant findings and recommended
     actions.

- -    Policy, legal and administrative framework: discusses the policy, legal and
     administrative framework within which the EIA report is to be carried out.

- -    Project description: describes the proposed project and its geographic,
     ecological, social and temporal context, including any off-site investments
     that may be required (e.g. dedicated pipelines, access roads, power plants,
     water supply, housing, and raw material and product storage facilities).
     Indicates the need for any resettlement or social development plan.
     Normally includes a map showing the project site and the area affected by
     the project.

- -    Baseline data: assesses the dimensions of the study area and describes
     relevant physical, biological and socio-economic conditions, including all
     changes anticipated before the project commences. Additionally, takes into
     account current and proposed development activities within the project area
     but not directly connected to the project. Data should be relevant to
     decisions about project site, design, operation, or mitigatory measures;
     the section indicates accuracy, reliability and sources of the data.

- -    Environmental Impacts: predicts and assesses the project's likely positive
     and negative impacts, in quantitative terms to the extent possible.
     Identifies mitigation measures and any negative environmental impacts that
     cannot be mitigated. Explores opportunities for environmental enhancement.
     Identifies and estimates the extent and quality of available data,
     essential data gaps and uncertainties associated with predictions, and
     specifies topics that do not require further attention.

- -    Analysis of alternatives: systematically compares feasible alternatives to
     the proposed project site, technology, design and operation including the
     "without project" situation in terms of their potential environmental
     impacts; the feasibility of mitigating these impacts; their capital and
     recurrent costs; their suitability under local conditions; and their
     institutional, training and monitoring requirements. For each of the
     alternatives, quantifies the environmental impacts to the extent possible,
     and attaches economic values where feasible. States the basis for selecting
     the particular project design proposed and offers justification for
     recommended emission levels and approaches to pollution prevention and
     abatement.

- -    Environmental Management Plan (EMP): describes mitigation, monitoring and
     institutional measures to be taken during construction and operation to
     eliminate adverse impacts, offset them, or reduce them to acceptable
     levels.


                                       12



- -    Consultation: Record of consultation meetings, including consultations for
     obtaining the informed views of the affected people, local non-governmental
     organizations (NGOs) and regulatory agencies.

NB This Appendix is based on the World Bank Operational Policy - OP 4.01, Annex
B.


                                       13



3. ILLUSTRATIVE LIST OF SENSITIVE SECTORS, CHARACTERISTICS AND AREAS

1. Sensitive Sectors

Large-scale projects in the following sectors:

     (1) Mining

     (2) Oil and natural gas development

     (3) Oil and gas pipelines

     (4) Iron and steel (projects that include large furnaces)

     (5) Non-ferrous metals smelting and refining

     (6) Petrochemicals (manufacture of raw materials; including complexes)

     (7) Petroleum refining

     (8) Oil, gas and chemical terminals

     (9) Paper and pulp

     (10) Manufacture and transport of toxic or poisonous substances regulated
     by international treaties, etc.

     (11) Thermal power

     (12) Hydropower, dams and reservoirs

     (13) Power transmission and distribution lines involving large-scale
     involuntary resettlement, large-scale logging or submarine electrical
     cables

     (14) Roads, railways and bridges

     (15) Airports

     (16) Ports and harbors

     (17) Sewage and wastewater treatment having sensitive characteristics or
     located in sensitive areas or their vicinity

     (18) Waste management and disposal

     (19) Agriculture involving large-scale land-clearing or irrigation

     (20) Forestry

     (21) Tourism (construction of hotels, etc.)


                                       14



2. Sensitive Characteristics

     (1) Large-scale involuntary resettlement

     (2) Large-scale groundwater pumping

     (3) Large-scale land reclamation, land development and land-clearing

     (4) Large-scale logging

3. Sensitive Areas

Projects in the following areas or their vicinity

     (1) National parks, nationally-designated protected areas (coastal areas,
     wetlands, areas for ethnic minorities or indigenous peoples and cultural
     heritage, etc. designated by national governments)

     (2) Areas considered to require careful consideration by the country or
     locality

     Natural Environment

          a) Primary forests or natural forests in tropical areas

          b) Habitats with important ecological value (coral reefs, mangrove
          wetlands and tidal flats, etc.)

          c) Habitats of rare species requiring protection under domestic
          legislation, international treaties, etc.

          d) Areas in danger of large-scale salt accumulation or soil erosion

          e) Areas with a remarkable tendency towards desertification

     Social Environment

          a) Areas with unique archeological, historical or cultural value

          b) Areas inhabited by ethnic minorities, indigenous peoples or nomadic
          peoples with traditional ways of life and other areas with special
          social value .

4. INFORMATION REQUIRED FOR SCREENING PROCESS

The following data shall be used in principle to conduct screening. When
necessary, additional data may be required depending on the nature of the
project and peripheral circumstances, etc.


                                       15



Items to be Listed

1. Permits and Approvals

     -    Need for permits and approvals for Environmental Impact Assessment

     -    Status of acquisition of permits and approvals for EIA

     -    Date of issue of permits and approvals for EIA

     -    Names of organizations issuing permits and approvals for EIA

     -    Status of acquisition of other environmental permits and approvals

2. Project Details

     -    Location of project site

     -    Project Description

     -    Relevant sector

     -    Scale, etc. of project

3. Environmental Impact

     -    Degree of environmental impact

     -    Existence of sensitive areas

     -    Existence of sensitive characteristics

     -    Scale of sensitive characteristics

5. CATEGORIES AND ITEMS IN CHECKLIST

The checklists include the following categories and items related to the
environment. When using these checklists, the appropriate items should be
checked based on the sector and nature of the project.



Category                                 Item
- --------                                 ----
                                      
1. Permits and approvals, explanations   -    EIA and environmental permits
                                         -    Explanations to the Public
2. Anti-pollution measures               -    Air quality
                                         -    Water quality



                                       16



                                      
                                         -    Waste
                                         -    Soil contamination
                                         -    Noise and vibration
                                         -    Subsidence
                                         -    Odor
                                         -    Sediment
3. Natural environment                   -    Protected areas
                                         -    Ecosystem
                                         -    Hydrology
                                         -    Topography and geology
                                         -    Management of abandoned sites
4. Social environment                    -    Resettlement
                                         -    Living and livelihood
                                         -    Heritage
                                         -    Landscape
                                         -    Ethnic minorities and indigenous
                                              peoples
5. Other                                 -    Impact during construction
                                         -    Accident prevention measures
                                         -    Monitoring



6. ITEMS REQUIRING MONITORING

Items requiring monitoring shall be decided according to the sector and nature
of the project, with reference to the following list of items.

Items

1. Permits and approvals, explanations

- -    Response to matters indicated by authorities

2. Anti-pollution measures

                              
- -     Air quality:               SO(2), No(2), CO, O(2), soot and dust,
                                 suspended particulate matter, coarse
                                 particulate, etc.
- -     Water quality:             pH, SS (suspended solids), BOD (biochemical
                                 oxygen demand)




                                       17



                              
                                 /COD (chemical oxygen demand), DO (dissolved
                                 oxygen), total nitrogen, total phosphorus,
                                 heavy metals, hydrocarbons, phenols, cyanogen
                                 compounds, mineral oils, water temperature,
                                 etc.
- -     Waste
- -     Noise and vibration
- -     Odors

3. Natural environment
- -     Ecosystems                 : Impact on valuable species, countermeasures,
                                 etc

4. Social environment
- -     Resettlement
- -     Lifestyle and livelihood



NB: For air and water quality, specify whether you are monitoring emission
levels or environmental levels. Also, it should be noted that the items which
require monitoring will differ depending on whether the impact in question will
occur during construction or during the operation of the project.


                                       18



                                                                         ANNEX F

____________, 2005

Messrs.
SOCIEDAD MINERA CERRO VERDE S.A.A.
ATN.: (BORROWER'S LEGAL REPRESENTATIVE)
(BORROWER'S ADDRESS)
Peru.

                                        "AFFIDAVIT"

Dear Sirs,

We hereby represent that _________________, a Bank incorporated under the laws
of __________, is acting in its capacity of Agent in a loan facility that has
been made available to SOCIEDAD MINERA CERRO VERDE S.A.A., with the following
characteristics:

                                
LENDER:                            _____________________________________________
LENDER'S COUNTRY OR ORIGIN:        _____________________________________________
BORROWER:                          SOCIEDAD MINERA CERRO VERDE S.A.A.
AGENT:                             _____________________________________________
PURPOSE:                           _____________________________________________
FACILITY TYPE:                     _____________________________________________
AVAILABILITY:                      _____________________________________________
ADVANCE TERM:                      _____________________________________________
AMOUNT:                            _____________________________________________
INTEREST TYPE / RATE:              _____________________________________________
INTEREST PERIOD:                   _____________________________________________
SECURITY:                          _____________________________________________
INSTALLMENTS / PAYMENT SCHEDULE:   _____________________________________________
FEES:



To our knowledge, this transaction is not hiding a loan between economically
related parties.

This certification is being issued by an authorized officer of Sumitomo Mitsui
Banking Corporation and upon request by Sociedad Minera Cerro Verde S.A.A.

Sincerely yours,

Sumitomo Mitsui Banking Corporation


By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------


                                      F-1



                                                                         ANNEX G

                       DISBURSEMENT AND PAYMENT PROCEDURES

1. Disbursement Procedures

Not later than 2:00 p.m., New York time, on each Disbursement Date, the JBIC
Agent shall:

     i.   transfer to the Onshore Dollars Account the amounts of the
          disbursement of the Tranche A Loan on deposit in the JBIC Agent Tokyo
          Disbursement Account and the disbursement of the Tranche B Loans on
          deposit in the JBIC Agent New York Disbursement Account;

     ii.  issue to its corresponding bank for Dollar payments an MT 202 SWIFT
          message with instructions to transfer the disbursements referred to in
          the immediately preceding sub-clause (i) to the Onshore Dollars
          Account with a value date that is the Disbursement Date; and

     iii. issue a payment order in the form of an MT 103 SWIFT message to the
          Onshore Collateral Agent.

2. Payment Procedures

(1) Not later than 11:00 a.m., New York time, on the date that is two (2)
Business Days prior to each Payment Date the Borrower shall arrange for, and
confirm to the JBIC Agent that:

     i.   it has cash available in the Proceeds Account at least equal to the
          amount required to be paid on such Payment Date (the "PAYMENT
          AMOUNT"); and

     ii.  it has instructed the Offshore Collateral Agent to (A) issue an MT 202
          SWIFT message with irrevocable instructions to transfer the Payment
          Amount to the JBIC Agent New York Repayment Account with a value date
          that is the Payment Date and (B) issue to the JBIC Agent an MT 103
          SWIFT message advising the JBIC Agent of the transfer.

(2) Not later than 11:00 a.m., Tokyo time, on each Payment Date, the JBIC Agent
shall:


                                      G-1



     i.   issue to its corresponding bank in New York an MT 202 SWIFT message
          with instructions to transfer funds to the JBIC New York Repayment
          Account and to the accounts of the Tranche B Funding Source Banks as
          designated by them, in each case with a value date that is the Payment
          Date; and

     ii.  notify by telephone each of JBIC and the Tranche B Funding Source
          Banks of the transfer to each of its respective portion of the Payment
          Amount.


                                      G-2



                                                                         ANNEX H

                          FORM OF JBIC PROMISSORY NOTE

                              PAGARE NO NEGOCIABLE

Place and date of issuance: Lima Peru, __________
Amount US$__________

FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A. (the
"Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange and
duly incorporated under the laws of the Republic of Peru, registered with the
Public Registry of Companies of Lima, under File No. __________, and whose
principal office is at __________, Republic of Peru, by this non negotiable (no
negociable) promissory note ("pagare") (the "Promissory Note") except as
permitted in Section 12.13 (b) of the MPA, unconditionally promises to pay to
the order of __________ (the "Holder"), against presentment of this note, the
sum of __________ dollars of the United States of America (US$__________) (the
"Principal Amount"), payable on the dates set forth in the following payment
schedule (each date, a "Payment Date") and in the amounts indicated next to the
applicable Payment Date, provided that the principal amount to be paid to the
Holder on a Payment Date shall not exceed the principal amount hereof
outstanding immediately prior to such Payment Date.



                       PRINCIPAL AMOUNT
    PAYMENT DATE         TO BE REPAID
- --------------------   ----------------
                    
First Payment Date        __________

6th month after the       __________
First Payment Date

12th month after the      __________
First Payment Date

18th month after the      __________
First Payment Date

24th month after the      __________
First Payment Date

30th month after the      __________
First Payment Date

36th month after the      __________
First Payment Date

42nd month after the      __________
First Payment Date

48th month after the      __________
First Payment Date

54th month after the      __________
First Payment Date

60th month after the      __________
First Payment Date

66th month after the      __________
First Payment Date

72nd month after the      __________
First Payment Date

78th month after the      __________
First Payment Date

84th month after the      __________
First Payment Date

90th month after the      __________
First Payment Date


The Borrower also promises to pay to the Holder interest on the outstanding and
unpaid principal amount of this Promissory Note, from the date hereof until the
last Payment Date, at an annual rate of the Base Rate plus the Applicable Margin
(the "Interest Rate"), such interest to accrue


                                      H-1



semiannually on the outstanding principal amount during the Interest Period.
Interest shall be payable in arrears on each Interest Payment Date. All
computations of interest shall be made on the basis of a year of three hundred
and sixty (360) days and the actual number of days elapsed (fractional sums of
less than one cent (US$0.01) being disregarded).

If any payment to be made hereunder is due on a day which is not a Business Day,
such payment shall be made on the immediately succeeding Business Day.

          If the principal amount of this Promissory Note is not paid in full
when due, then, without prejudice to any other rights or remedies of the Holder,
such principal amount remaining unpaid shall carry default interest from the due
date thereof, up to the date of payment of such principal amount to the Holder
(after as well as before judgment) at an annual rate equal to the Default Rate.

          The Borrower may prepay on any Payment Date after the Completion
Release Date and upon not less than 60 days prior written irrevocable notice,
all or part of the outstanding principal amount hereof, so long as, in
connection with a voluntary partial prepayment, the aggregate amount of any such
voluntary partial prepayment equals at least __________(2) dollars of the United
States of America (US$__________).

          [No premium or penalty shall be payable in connection with a
prepayment of all or part of the outstanding principal amount hereof.][Borrower
shall pay to the Holder a prepayment premium equal to one-half of one per cent
(0.5%) of the amount of principal to be prepaid if Borrower elects to
voluntarily prepay all or part of the outstanding principal amount hereof. No
premium or penalty shall be payable in connection with other prepayments.](3)

          Each prepayment of the outstanding principal amount hereof shall
(unless such prepayment repays in full such outstanding principal amount) be
applied to prepay ratably each outstanding installment of principal hereof
remaining to be paid as of the date of such prepayment.

          For purposes of this Promissory Note, the following terms shall have
the following meanings:

          "Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.

          "Applicable Margin" means [0.875% per annum][1.35% per annum](4).

          "Base Rate" means, with respect to any Interest Period and for
purposed of the Default Rate, (i) the rate per annum (on the basis of a 360-day
year) quoted on the Telerate Screen Page 3750 for the purpose of displaying
London interbank offered rates of major banks for deposits in dollars as the
"British Bankers Association Interest Settlement Rate" in dollars (hereinafter
referred to as "BBA LIBOR"), or if such page ceases to display, such other page
on

- ----------
(2)  Insert pro rata amount of the minimum prepayment amount applicable to the
     Advance(s) evidenced by the Promissory Note.

(3)  Include prepayment premium language for Tranche A loans. Otherwise, include
     no prepayment premium language.

(4)  Include as appropriate for loans of Tranche A or Tranche B .The pagares
     must be replaced on the Payment Date immediately following the Completion
     Release Date.


                                      H-2



Telerate or on such other service as may be selected by the Holder as suitable
for determining BBA LIBOR, for a period of six (6) months, at approximately
11:00 a.m., London time, on the relevant Calculation Date, or (ii) if no rate is
quoted on such pages on such Calculation Date, the average (rounded upwards, if
necessary, to the nearest one-sixteenth of one per cent (1/16%)) of the rates
per annum for a period of six (6) months at which deposits in dollars are
offered to at least two Reference Banks, as set out below, in the London
interbank market, in each case, at approximately 11:00 a.m., London time, on
such Calculation Date. "Reference Banks" shall mean two or more banks selected
by the Holder. In the event that such rate is not available at such time for any
reason, then "Floating Rate" for such Interest Period or for purposed of the
Default Rate shall be determined by the Holder.

          "Business Day" means a day on which banks are generally open for
business in London, England, New York, New York, United States, Tokyo, Japan,
Frankfurt am Main, Germany and Lima, Peru.

          "Calculation Date" means (i) with respect to any Interest Period, the
day which is two (2) LIBOR Business Days prior to the commencement of such
Interest Period; and (ii) with respect to the Default Rate, the day which is two
(2) LIBOR Business Days prior to (a) the day on which the unpaid amount becomes
due and payable (for the period from and including such due date up to and
excluding the immediately succeeding Interest Payment Date (in the case where
such period includes the date of actual receipt of the payment by the Holder, up
to and excluding such date)), and (b) to the extent such overdue amount is not
paid during the period described in Clause (a) above each succeeding Interest
Payment Date (for the subsequent period from and including such Interest Payment
Date up to and excluding the immediately succeeding Interest Payment Date (in
the case where such period includes the date of actual receipt of the payment by
the Holder, up to and excluding such date)).

          "Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.

          "Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.

          "Default Rate" means the applicable Interest Rate (including the
Applicable Margin) plus 2% per annum.

          "First Payment Date" means the earlier of (i) the March 20 or the
September 20 next occurring after the Commercial Production Start-up Date, and
(ii) March 20, 2008.

          "Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.

          "Governmental Authority" means any national, state, county, city,
town, village, municipal or other local governmental department, commission,
board, bureau, agency, authority or instrumentality of any nation that affects
or may affect the transactions contemplated hereby


                                       H-3



or any political subdivision thereof, and any person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to any of the foregoing entities, including, without limitation, all
commissions, boards, bureaus, arbitrators and arbitration panels, and any
authority or other person controlled by any of the foregoing.

          "Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.

          "Interest Period" means any of the following periods:

               (i) on or prior to the First Payment Date, each period commencing
     on an Interest Payment Date (or with respect to the first Interest Period
     on the date hereof) and ending on the day immediately preceding the next
     succeeding Interest Payment Date (including the first day and the last day
     of such period); and

               (ii) thereafter, each period commencing on a Payment Date and
     ending on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

          "LIBOR Business Day" means a day on which dealings in deposits in
dollars are carried on in the London interbank Euro-currency market;

          "Loan Agreement" means the Loan Agreement dated as of September 30th,
2005 between the Borrower and KfW.

          "MPA" means the Master Participation Agreement dated as of September
30th, 2005 entered into among the Borrower, Japan Bank For International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia, and Mizuho Corporate Bank, Ltd.

          "MSA" means the Master Security Agreement dated as of September 30th,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.

          "Peruvian Income Tax Act" means the Legislative Decree 774 of December
31, 1993, as amended.

          "Sulfide Project" means the Borrower's development of a primary
sulfide portion of the ore body beneath the oxide portion of the ore body
currently in production at its Cerro Verde copper mine, located in the Districts
of Uchumayo and Yarabamba, Province of Arequipa, Peru.

          "Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.

          All payments by the Borrower of principal and interest hereunder shall
be made in dollars of the United States of America, not later than 11:00 a.m.,
New York City time, on the


                                       H-4



due date for payment thereof (any payment received after such time shall be
deemed to have been made on the immediately succeeding Business Day), by
transfer of immediately available funds to the account of Sumitomo Mitsui
Banking Corporation in its capacity as the Holder's agent at [___________(5)].

          Any and all payments made by or on account of the Borrower in respect
of any obligation hereunder shall be made free and clear of, and without
deduction or withholding for or on account of, any and all present or future
Taxes (excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority of the Republic of Peru,
unless such deduction or withholding is required by an applicable Government
Rule, in which case the following paragraph shall apply.

          If the Borrower shall be required by law to deduct any Indemnified
Taxes now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.

          The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.

          The Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of the Courts of Downtown Lima (Lima-Cercado) and of any Federal or
State court located in the Borough of Manhattan, The City of New York, as the
Holder hereof may elect for any proceeding arising out of or relating to this
Promissory Note. The Borrower waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.

- ----------
(5)  Insert payment instructions, including place of payment.


                                      H-5



          The Parties further agree that, without prejudice to the law of the
State of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.

          This Promissory Note is issued in Spanish and English. The Parties
agree that the applicable version of this Promissory Note will be (i) the
Spanish version in case the jurisdiction of the Courts of Downtown Lima
(Lima-Cercado) is the jurisdiction elected by the Holder, or be (ii) the English
version in case the jurisdiction of any Federal or State court located in the
Borough of Manhattan, The City of New York is the jurisdiction elected by the
Holder. In case of discrepancies between the Spanish and English versions (i)
the Spanish version shall prevail when the Courts of Downtown Lima
(Lima-Cercado) or other Spanish speaking jurisdiction is the jurisdiction
elected by the Holder, and (ii) the English version shall prevail when the
Federal or State court located in the Borough of Manhattan, The City of New York
or any other non-Spanish speaking jurisdiction is the jurisdiction elected by
the Holder.

Lima, __________

By: Sociedad Minera Cerro Verde, S.A.A.
Taxpayer Registry No.: 20170072465
Name of authorized officer: __________
Identification Card No __________
Power register in Entry No. __________ of the Public Registry


                                      H-6



                                                                         ANNEX I

                            Environmental Disclosure

The Borrower excludes from this representation all construction activities and
operations that are not conducted by, or that are not under the control of, the
Borrower, other than construction activities that are being performed by third
parties who are acting pursuant to construction contractual arrangements with
the Borrower.


                                      I-1

EX-10.6

                                                                    Exhibit 10.6

                                                                  EXECUTION COPY

================================================================================

                               KFW LOAN AGREEMENT

                                     between

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                   as Borrower

                                       and

                                      KfW,
                                    as Lender

                         Dated as of September 30, 2005

                                  US$22,500,000

================================================================================



                                TABLE OF CONTENTS

          This table of contents is not part of the Agreement to which it is
attached, but is inserted for convenience only.



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I DEFINITIONS....................................................     1
   1.01 Definitions......................................................     1
   1.02 Other Definitions; Interpretation................................     3
   1.03 Incorporation by Reference.......................................     3
   1.04 Types of Loans...................................................     4

ARTICLE II THE LOANS.....................................................     4
   2.01 Loans............................................................     4
   2.02 Manner of Borrowing..............................................     4
   2.03 Certain Notices..................................................     5
   2.04 Conversions into Fixed Rate Loans................................     5
   2.05 Reduction in Commitment..........................................     5
   2.06 Availability Period..............................................     5

ARTICLE III PRINCIPAL, INTEREST AND PROMISSORY NOTES.....................     5
   3.01 Principal........................................................     5
   3.02 Interest.........................................................     5
   3.03 Post-Default Interest............................................     6
   3.04 Promissory Notes.................................................     6
   3.05 Selection of Fixed Rates.........................................     7
   3.06 Consolidation of Applicable Base Rate for Fixed Rate Loans.......     7

ARTICLE IV COMMISSIONS...................................................     7
   4.01 Commitment Commission............................................     7
   4.02 Loan Management Commission.......................................     7
   4.03 Facility Fee.....................................................     7

ARTICLE V THE HERMES GUARANTEE...........................................     8
   5.01 The HERMES Guarantee.............................................     8
   5.02 Information......................................................     8
   5.03 KfW's Right to Demand Information and Give Approval Regarding
           Export Contracts..............................................     8

ARTICLE VI PREPAYMENT....................................................     8
   6.01 Voluntary Prepayments............................................     8
   6.02 Pro Rata Prepayment..............................................     9
   6.03 Prepayment Compensation for Fixed Rate Loans.....................     9
   6.04 Mandatory Prepayments............................................    10


                               KfW Loan Agreement



                                      -ii-


                                                                         
ARTICLE VII PAYMENTS.....................................................    10
   7.01 Payments.........................................................    10
   7.02 Non-Business Days................................................    10
   7.03 Computations.....................................................    11

ARTICLE VIII CERTAIN INDEMNITIES.........................................    11
   8.01 Increased Cost of Loans..........................................    11
   8.02 Alternative Interest Rate........................................    11
   8.03 Mitigation.......................................................    12

ARTICLE IX CONDITIONS OF LENDING.........................................    12
   9.01 Initial Loan.....................................................    12
   9.02 Additional Conditions............................................    13

ARTICLE X COVENANTS......................................................    14

ARTICLE XI REPRESENTATIONS AND WARRANTIES................................    14

ARTICLE XII EVENTS OF DEFAULT; REMEDIES..................................    14
   12.01 Events of Default...............................................    14
   12.02 Remedies........................................................    14
   12.03 Suspension, Cancellation or Termination of Commitment...........    14

ARTICLE XIII MISCELLANEOUS...............................................    14
   13.01 No Waiver.......................................................    14
   13.02 No Immunity.....................................................    15
   13.03 Jurisdiction and Service of Process.............................    15
   13.04 GOVERNING LAW...................................................    15
   13.05 Assignments and Participations; Information.....................    15
   13.06 Amendments, Etc.................................................    16
   13.07 Counterparts....................................................    16
   13.08 Judgment Currency...............................................    16
   13.09 Successors and Assigns..........................................    16
   13.10 Stamp Taxes.....................................................    16
   13.11 Survival........................................................    17
   13.12 Severability....................................................    17
   13.13 WAIVER OF JURY TRIAL............................................    17
   13.14 Notices.........................................................    17
   13.15 English Language................................................    17
   13.16 No Restriction..................................................    17



EXHIBIT A - Amortization Schedule

EXHIBIT B - Form of Promissory Note

EXHIBIT C - Form of KfW Loan Agreement Drawdown Certificate

                               KfW Loan Agreement



                               KfW LOAN AGREEMENT

          KfW LOAN AGREEMENT dated as of September 30, 2005 (this "Agreement")
between SOCIEDAD MINERA CERRO VERDE S.A.A., a sociedad anonima abierta organized
under the laws of Peru (the "Borrower"), and KfW, a corporation under the public
law of the Federal Republic of Germany ("KfW").

          KfW is majority-owned by the German government and in accordance with
its Bylaws and institutional objectives, KfW has agreed to grant a credit
facility to the Borrower for purposes of developing and promoting mining
activities in Peru.

          For purposes of financing in part the development by the Borrower of
the Sulfide Project (referred to in the Master Participation Agreement referred
to below), the Borrower is entering into various loan and credit agreements,
including this Agreement, setting out the terms upon which financing is to be
provided for such development. In conjunction therewith, the Borrower, KfW,
JBIC, the Lead JBIC Arrangers, the Commercial Banks and the Administrative Agent
are entering into a master participation agreement (the "Master Participation
Agreement"), containing certain representations, covenants, undertakings and
security for the common benefit of the Senior Facility Lenders providing the
Senior Facility Loans (as defined in the Master Participation Agreement). Also
in connection therewith, the Parent Companies shall enter into a transfer
restrictions agreement (the Transfer Restrictions Agreement referred to in the
Master Participation Agreement), for the common benefit of such Senior Facility
Lenders, and the Parent Companies shall enter into a Completion Guarantee (the
Completion Guarantee referred to in the Master Participation Agreement)
guaranteeing the payment of the Senior Loan Obligations until Completion and
containing undertakings regarding Completion of the Sulfide Project. Based on
the foregoing, KfW is prepared, on the terms and subject to the conditions set
forth herein and in the other Financing Documents, to make Loans to the Borrower
that constitute Loans in an aggregate principal amount up to US$22,500,000 for
the purchase of equipment and services delivered by the Exporter under the
Export Contracts in connection with the development of the Sulfide Project.

          Accordingly, the parties hereto hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

          1.01 Definitions. Terms defined in this Agreement shall have their
respective defined meanings as provided herein. Capitalized terms used herein
(including the preamble and recital of this Agreement) and not otherwise defined
herein shall have the meanings assigned to such terms in the Master
Participation Agreement (including Schedule Z thereto). As used in this
Agreement, the following terms shall have the following respective meanings:

          "Applicable Base Rate" shall mean:

          (a) for each Floating Rate Loan during each Interest Period or Default
     Interest Period therefor, the interest rate per annum for Dollar deposits
     for a period equal to (or, if there is no equal, then most comparable to)
     such Interest Period or Default Interest Period

                               KfW Loan Agreement



                                       -2-


     which appears on Reuters Screen LIBOR01 Page (or such other page as may
     replace that page on that service for the purpose of displaying the British
     Bankers Association Interest Settlement Rate) at or about 11:00 a.m. London
     time on the date two Eurodollar Business Days prior to the first day of
     such Interest Period or Default Interest Period; provided that, if no such
     rate appears on Reuters Screen LIBOR01 Page (or such other page as may
     replace that page on that service for the purpose of displaying the British
     Bankers Association Interest Settlement Rate) for any relevant Interest
     Period or Default Interest Period, the Applicable Base Rate shall mean for
     each Loan during such Interest Period or Default Interest Period the rate
     per annum determined by KfW which appears on the page designated Page 3750
     on the Moneyline Telerate Inc. at or about 11:00 a.m. London time on the
     date two Eurodollar Business Days prior to the first day of such Interest
     Period or Default Interest Period; and provided further that if no such
     rates so appear on the page designated Page 3750 on the Moneyline Telerate
     Inc. for any relevant period, the relevant rate of interest shall be
     determined in accordance with Section 8.03 hereof.

          (b) for each Fixed Rate Loan during each Fixed Rate Period therefor,
     the rate per annum equal to the funding costs of KfW in Dollars of a KfW
     Loan for maturities matching as closely as possible the maturity of the
     requested KfW Loan.

          "Default Interest Period" shall mean each successive period (not in
excess of six months) while any amount payable by the Borrower hereunder is in
default, as KfW shall choose in its sole discretion, the first such period to
commence as of the date on which such amount in default becomes due and each
succeeding such period to commence immediately upon the expiry of the
immediately preceding such period.

          "Default Margin" shall mean a rate per annum equal to 2%.

          "Drawdown Certificate" shall have the meaning given to that term in
Section 9.02(b) hereof.

          "Export Contracts" shall mean (i) the agreement between Fluor Daniel
Sucursal Del Peru ("Fluor") and Exporter, dated March 15, 2005, for the purchase
of 4 High Pressure Grinding Rolls in a total amount of US$20,092,452.57 and (ii)
the agreement between Fluor and Exporter, dated February 18, 2005, for the
purchase of 4 ball mills in a total amount of US$10,620,502.51, each in
connection with the Sulfide Project.

          "Exporter" shall mean Polysius AG, an entity domiciled in Germany that
has entered into certain contracts for the supply of goods and/or the rendering
of services in connection with the Sulfide Project.

          "Facility Fee" shall have the meaning assigned to such term in Section
4.03 hereof.

          "Fixed Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (b) in the definition of
"Applicable Base Rate" in this Section 1.01.

                               KfW Loan Agreement



                                       -3-


          "Fixed Rate Period" shall mean, for each Fixed Rate Loan, the period
from the date such Loan is made or converted from a Floating Rate Loan into a
Fixed Rate Loan until the maturity of the Loan.

          "Floating Rate Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (a) in the definition of
"Applicable Base Rate" in this Section 1.01.

          "Frankfurt Business Day" shall mean any day on which banks are
generally open for business in Frankfurt Germany.

          "German Supply Portion" shall mean those items of equipment and
services of German origin which have been provided by the Exporters pursuant to
the Export Contracts.

          "Germany" shall mean the Federal Republic of Germany.

          "Head Office" shall mean the principal office of KfW in Germany,
presently located at PalmengartenstraBe 5-9, D-60325 Frankfurt am Main, Germany.

          "HERMES" shall mean Euler Hermes Kreditversicherungs-AG acting on
behalf of the government of the Federal Republic of Germany.

          "HERMES Guarantee" shall mean the insurance coverage to be provided by
HERMES in favor of KfW in respect of the Borrower's obligations under this
Agreement, which shall be in form and substance satisfactory to KfW.

          "KfW Loans" or "Loans" shall mean the loans provided for in Section
2.01 hereof, which may be Floating Rate Loans and/or Fixed Rate Loans.

          "Margin" shall mean 0.35% per annum.

          "Master Participation Agreement" shall have the meaning assigned to
such term in the recitals of this Agreement.

          "Reuters Screen LIBOR01 Page" shall mean the display page so
designated on the Reuter Monitor Money Rates Service (or such other page as may
replace that page on that service for the purpose of displaying London interbank
offered rates for Dollar deposits).

          "Type" shall have the meaning given to that term in Section 1.04
hereof.

          "U.S." shall mean the United States of America.

          1.02 Other Definitions; Interpretation. This Agreement shall be
interpreted in accordance with the rules of interpretation set forth in Section
1.02 of the Master Participation Agreement, which are incorporated by reference
herein as if fully set forth herein.

          1.03 Incorporation by Reference. This Agreement and the Master
Participation Agreement shall be viewed as, and shall constitute, one agreement
governing the terms and

                               KfW Loan Agreement



                                      -4-


conditions of the Loans, provided that the exercise of enforcement remedies
shall be made solely pursuant to and in accordance with the Master Participation
Agreement and the Master Security Agreement. In the event of conflict between
this Agreement and the Master Participation Agreement or the Master Security
Agreement, the Master Participation Agreement or the Master Security Agreement,
as the case may be, shall prevail.

          1.04 Types of Loans. Loans hereunder are distinguished by "Type". The
"Type" of a Loan refers to whether such Loan is a Floating Rate Loan or a Fixed
Rate Loan, each of which constitutes a Type.

                                   ARTICLE II

                                    THE LOANS

          2.01 Loans. KfW agrees, upon the terms and conditions of this
Agreement and the Master Participation Agreement, to make Loans to the Borrower
from time to time in such aggregate principal amount not exceeding its Aggregate
Committed Amount, and on such Business Days during the period from the date
hereof to but excluding the Availability Period End Date as the Borrower shall
request pursuant to Section 2.02 hereof. KfW's Aggregate Committed Amount shall
be utilized for the following purposes: (i) an aggregate principal amount not to
exceed approximately US$20,670,300 to finance or reimburse the Borrower for
expenses incurred in connection with up to 85% of the German Supply Portion and
(ii) an aggregate amount not to exceed approximately US$1,829,700 to finance or
reimburse the Borrower for expenses incurred in connection with up to 100% of
the Facility Fee, collectively not to exceed, in any event, US$22,500,000 in the
aggregate.

          The Loans may be borrowed as Fixed Rate Loans or as Floating Rate
Loans. Floating Rate Loans may be converted into Fixed Rate Loans as provided in
Section 2.04 hereof.

          The Loans shall be advanced from time to time, but in no event more
frequently than once per calendar month, in accordance with the terms of this
Agreement and the Master Participation Agreement. Any amounts borrowed and paid
or prepaid pursuant to the terms herein may not be reborrowed by the Borrower.

          The Borrower shall not be relieved of its obligations under this
Agreement to pay all amounts due and payable on the relevant due date by reason
of the KfW Loans being insufficient to finance up to 100% of the Facility Fee
under this Agreement.

          2.02 Manner of Borrowing. The Borrower shall give KfW not less than
fifteen (15) Business Days' prior notice (which notice shall be copied to the
Trustee and the Administrative Agent and shall be irrevocable and effective upon
receipt) specifying the date and amount of each borrowing hereunder, such notice
to be substantially in the form of Exhibit C and specifying whether the Borrower
requests a Floating Rate Loan or a Fixed Rate Loan. Except as to the borrowing
which utilizes the unborrowed portion of the Commitment in full, each borrowing
of Loans shall be in a minimum amount of US$500,000. No more than one borrowing
may be requested in any calendar month. The proceeds of each Loan shall be made
available directly to the Borrower by KfW in Dollars, on the respective
borrowing date, by credit

                               KfW Loan Agreement



                                      -5-


to the Onshore Dollars Account, thus reimbursing the Borrower for payments
already made under the respective Export Contract, provided that the conditions
precedent set forth in Section 9.01 have been met.

          2.03 Certain Notices. The Borrower shall notify KfW in writing (which
notice shall be irrevocable and effective upon receipt), at least five (5)
Frankfurt Business Days prior to the end of an Interest Period for any Floating
Rate Loan, if the Borrower wishes to convert such Loan into a Fixed Rate Loan
pursuant to Section 2.04 hereof.

          2.04 Conversions into Fixed Rate Loans. The Borrower shall have the
right to convert Floating Rate Loans into Fixed Rate Loans; provided that (a)
the Borrower shall give KfW notice of each such conversion pursuant to Section
2.03 hereof; (b) each such conversion shall be in a minimum amount of
US$500,000, provided, however, that the Borrower may convert any Floating Rate
Loans outstanding as of the Availability Period End Date in an amount less than
US$500,000; and (c) a Floating Rate Loan may be so converted only on the last
day of an Interest Period for such Loan. Upon conversion of Floating Rate Loans
to Fixed Rate Loans all subsequent disbursements shall be made as Fixed Rate
Loans. For the avoidance of doubt, once the Borrower shall have converted
Floating Rate Loans to Fixed Rate Loans, the Borrower shall not be permitted to
revert any such Loans back to Floating Rate Loans.

          2.05 Reduction in Commitment. The Borrower shall have the right to
terminate or reduce the aggregate unused amount of the Commitment subject to and
in accordance with Section 2.03 of the Master Participation Agreement.

          2.06 Availability Period. The facility will be available from the date
on which the conditions precedent set forth in Section 5.01 of the Master
Participation Agreement are fulfilled through the Availability Period End Date.

                                   ARTICLE III

                    PRINCIPAL, INTEREST AND PROMISSORY NOTES

          3.01 Principal. The Borrower agrees to repay the principal amount of
each Loan in 16 consecutive semi-annual installments on each Payment Date,
commencing on the first Payment Date in accordance with the Amortization
Schedule set forth in Exhibit A; provided, however, that the amount of the final
payment of principal of the Loans shall in any event be equal to the remaining
unpaid principal amount of the Loans.

          3.02 Interest. The Borrower agrees to pay KfW interest on the
Outstanding Base Amount of each Loan for the period from and including the date
of such Loan to but excluding the date such Loan shall be paid in full, at the
following rates per annum:

          (a) during such periods as such Loan is a Floating Rate Loan, for each
     Interest Period relating thereto, the Applicable Base Rate for such
     Floating Rate Loan for such Interest Period plus the applicable Margin
     plus, upon the occurrence and during the Continuance of any MPA Event of
     Default under Section 9.01 of the Master Participation Agreement, the
     Default Margin; and

                               KfW Loan Agreement



                                      -6-


          (b) during such periods as such Loan is a Fixed Rate Loan, for each
     Fixed Rate Period relating thereto, the Applicable Base Rate for such Fixed
     Rate Loan for such Fixed Rate Period plus the applicable Margin plus, upon
     the occurrence and during the Continuance of any MPA Event of Default under
     Section 9.01 of the Master Participation Agreement, the Default Margin.

Interest shall accrue (i) in the case of a Fixed Rate Loan, from and including
the date of such Loan in case of the first interest payment with respect to any
Advance or from and including the Interest Payment Date to which interest has
been paid in case of the second and any subsequent interest payments with
respect to each Advance to but excluding the next succeeding Interest Payment
Date or, in the case of payment pursuant to clause (B) below, to but excluding
the date of such payment, and (ii) in the case of a Floating Rate Loan, from and
including the first day of each Interest Period for such Loan to but excluding
the last day of such Interest Period or, in the case of payment pursuant to
clause (B) or (C) below, to but excluding the date of such payment. Accrued
interest on each Loan shall be payable (A) on each Interest Payment Date; (B)
upon the payment or prepayment thereof (on the principal amount so paid or
prepaid); and (C) in the case of a Floating Rate Loan, upon the conversion of
such Loan to a Fixed Rate Loan (on the principal amount so converted). Each
Interest Period for a Floating Rate Loan shall (y) comply with the definition of
the term "Interest Period" and (z) except for the first Interest Period for a
Floating Rate Loan, will have a duration of six months.

          3.03 Post-Default Interest. If any installment of principal of any
Loan or any other amount (including interest on a Loan) payable by the Borrower
hereunder is not paid in full when due (whether at the stated due date, by
acceleration or otherwise), the Borrower hereby agrees to pay from time to time
upon KfW's demand interest on the amount past due and unpaid for such period of
time within each related Default Interest Period during which such amount shall
be due and unpaid, at a rate per annum equal to the sum of (a) the Margin plus
(b) the Default Margin plus (c) (i) in the case of Fixed Rate Loan, during a
Fixed Rate Period therefor, the Applicable Base Rate therefor, and (ii) in all
other cases, the Applicable Base Rate for Floating Rate Loans for such Default
Interest Period.

          3.04 Promissory Notes.

          (a) As additional evidence of the Borrower's obligation to pay the
principal of the Loans as provided in Section 3.01 hereof, the Borrower shall
execute and deliver to the Trustee on behalf of KfW Promissory Notes issued by
the Borrower, in substantially the form set forth in Exhibit B hereto, with a
dual column translation into Spanish to be included therein, in accordance with
Section 2.08 of the Master Participation Agreement.

          (b) The execution and delivery by the Borrower of the Promissory Notes
shall not affect in any way whatsoever the rights or obligations of the Borrower
under this Agreement, and the rights and claims of KfW under the Promissory
Notes held by it shall not replace or supersede the rights and claims of KfW
hereunder, provided that payment of any part of the principal of any such
Promissory Note in accordance with the terms of this Agreement shall, to the
extent that such payment if made hereunder would discharge the Borrower's
obligations hereunder in respect of the payment of the principal of the Loan
evidenced by such Promissory

                               KfW Loan Agreement



                                      -7-


Note, discharge such obligation pro tanto and the payment of any principal of a
Loan in accordance with the terms and conditions hereof shall discharge the
obligations of the Borrower under the Promissory Note evidencing such Loan to
the extent of such payment.

          3.05 Selection of Fixed Rates. Not more than 15 and not less than
seven Business Days prior to a proposed borrowing of a Loan hereunder or prior
to the last day of an Interest Period for any Floating Rate Loan, the Borrower
may request that KfW advise the Borrower on an indicative basis (which shall not
be binding) of KfW's best estimate of what the expected Applicable Base Rate
would be for a Fixed Rate Loan with a Fixed Rate Period commencing on the date
of borrowing of the proposed Loan or on the last day of such Interest Period, as
the case may be, and ending on the Final Maturity Date; provided, however, that
any change in such Applicable Base Rate from that so advised by KfW shall result
only from a change in KfW's funding costs.

          3.06 Consolidation of Applicable Base Rate for Fixed Rate Loans. In
the event that more than one Fixed Rate Loan is outstanding, KfW may in its own
discretion consolidate the Applicable Base Rates for Fixed Rate Loans
outstanding on such date into a single interest rate corresponding to the
weighted average of the Applicable Base Rates for such Fixed Rate Loans, rounded
down to 1/10,000 if the fifth decimal to be omitted is below 5 or rounded up to
1/10,000 if the fifth decimal to be omitted is 5 or above. Commencing with the
first Payment Date following such consolidation, such weighted average interest
rate shall constitute the Applicable Base Rate for the further computation and
payment of interest for such consolidated Fixed Rate Loans.

                                   ARTICLE IV

                                   COMMISSIONS

          4.01 Commitment Commission. The Borrower agrees to pay KfW a
commitment commission on the daily unborrowed amount of the Commitment which may
be reduced or terminated as contemplated in Section 2.03 of the Master
Participation Agreement for the period from and including the date of this
Agreement to but excluding the earliest of (a) the date the Commitment is
borrowed in full, (b) the date the Commitment is terminated and (c) the
Availability Period End Date, at a rate per annum equal to 0.25%. Accrued
commitment commission under this Section 4.01 shall be payable quarterly, in
arrears, on each Interest Payment Date and on each date falling three calendar
months after each such Interest Payment Date, with the last installment of the
commitment commission hereunder to be paid on the Availability Period End Date.

          4.02 Loan Management Commission. The Borrower shall pay to KfW an
upfront fee equal to 1% of the Commitment (determined as of the date of this
Agreement) payable within 30 days from and after the date of this Agreement.

          4.03 Facility Fee. On the date of disbursement of the initial Advance,
the Borrower agrees to pay a facility fee (the "Facility Fee") in such amount as
KfW shall determine is necessary to compensate it for costs and expenses
associated with the HERMES Guarantee. The Facility Fee as determined by KfW
shall be binding on the Borrower. If the Facility Fee or a

                               KfW Loan Agreement



                                      -8-


portion thereof is refunded to KfW by HERMES, KfW shall reimburse the Borrower
in an amount equal to the amount refunded to KfW by HERMES promptly upon receipt
of such refund from HERMES. If the Facility Fee exceeds the amount set forth in
Section 2.01, the Borrower shall pay the full amount of the Facility Fee
(including such excess) to KfW in accordance with this Section 4.03.

                                    ARTICLE V

                              THE HERMES GUARANTEE

          5.01 The HERMES Guarantee. KfW's rights to receive payment from the
Borrower under this Agreement shall be guaranteed by the Federal Republic of
Germany, pursuant to the HERMES Guarantee.

          5.02 Information. Subject to Section 12.10 of the Master Participation
Agreement and the generally applicable procedures of KfW in respect of
confidential commercial information, KfW shall be entitled to give information
relating to the Sulfide Project and to the KfW Loan Agreement to representatives
of the Federal Republic of Germany having any responsibility in connection with
the HERMES Guarantee and its representatives and advisors. Furthermore, subject
to Section 12.10 of the Master Participation Agreement and the generally
applicable procedures of KfW in respect of confidential commercial information,
KfW and the representatives of the Federal Republic of Germany shall be entitled
to give information relating to the KfW Loan Agreement to international
organizations entrusted with the collection of statistical data, particularly
data in connection with debt servicing.

          5.03 KfW's Right to Demand Information and Give Approval Regarding
Export Contracts. The Borrower shall inform KfW without delay of any event that,
in its reasonable judgment, could be reasonably expected to materially impede or
endanger the implementation of the Export Contracts according to schedule. The
Borrower shall not, without the prior written consent of KfW (which may not be
unreasonably withheld), agree to any modification of or amendment to the Export
Contracts that (a) reduces the total price of the Export Contracts below
US$22,500,000 or (b) changes the Exporter under such Export Contracts. In
addition, the Borrower shall inform KfW without delay of its own accord of any
modification of or amendment to the Export Contracts that may materially affect
the volume of goods and services or any other material provision of the Export
Contracts. The Borrower shall on demand furnish any information reasonably
requested by KfW regarding the Export Contracts.

                                   ARTICLE VI

                                   PREPAYMENT

          6.01 Voluntary Prepayments.

          (a) The Borrower shall have the right to prepay the Loans, in whole or
in part, without premium or penalty other than as required by Sections 6.01(b)
and Section 6.03 hereof, at any time or from time to time in accordance with
Section 3.05 of the Master Participation Agreement; provided, however, that each
prepayment of a Fixed Rate Loan, and each prepayment of a Floating Rate Loan on
a date other than the last day of the then current Interest

                               KfW Loan Agreement



                                      -9-


Period, shall be accompanied by, and the Borrower hereby agrees to pay to KfW on
the date of such prepayment, payment of the prepayment compensation (if any)
required under Section 6.03 hereof and reimbursement of funding losses or
expenses (if any) required under Section 3.11 of the Master Participation
Agreement. Partial prepayment shall be applied to the Loans in accordance with
Section 3.08 of the Master Participation Agreement.

          (b) Notwithstanding any provision herein to the contrary, if the
Borrower makes a voluntary prepayment of all or any portion of the principal
outstanding amount of any Floating Rate Loan or Fixed Rate Loan at any time
prior to the Final Maturity Date with the proceeds of replacement debt obtained
(either at the time or within a period of one year from the date of such
voluntary prepayment) from a Person other than the Parent Companies or an
Affiliate of the Parent Companies, the Borrower shall, on the date that such
replacement debt is obtained, pay to KfW a prepayment fee equal to one-half of
one per cent (0.5%) of the aggregate principal amount of Floating Rate Loans and
Fixed Rate Loans prepaid by the Borrower.

          (c) Notwithstanding any provisions herein to the contrary, if KfW
exercises its rights to suspend, cancel or terminate its aggregate Committed
Amount pursuant to Section 12.03 (other than by reason of, directly or
indirectly, improper acts or inactions of the Borrower), then the Borrower may
prepay all or any portion of any Loan without prepayment premium or penalty of
any kind whatsoever.

          6.02 Pro Rata Prepayment. The extent to which payments or prepayments
by the Borrower to any Senior Lender in respect of the Senior Loan Obligations
must be a Pro Rata Payment shall be determined in accordance with Section 3.04
of the Master Participation Agreement. KfW may waive its right to receive any
such prepayment without prejudice to its right to receive any subsequent
prepayment. Each prepayment of Loans under this Section 6.02 shall be
accompanied by the prepayment compensation (if any) required under Section 6.03
hereof and amounts (if any) then payable under Section 3.11 of the Master
Participation Agreement.

          6.03 Prepayment Compensation for Fixed Rate Loans. Without duplication
of any compensation payable under Section 3.11 of the Master Participation
Agreement, upon any payment prior to scheduled maturity (whether pursuant to
this Article VI or Article XII hereof or otherwise) of any principal of any
Fixed Rate Loan, in whole or in part if (a) the sum of the interest payments
which (in the absence of such prepayment) would have been payable on each
installment of such Loan (or portion thereof) so prepaid, on each Payment Date
from the date of such prepayment to the original scheduled maturity date of such
installment, at the applicable rate for such Loan specified in Article III
hereof minus the applicable Margin (for purposes of this Section 6.03, the
"Prepayment Interest") exceeds (b) the sum of the interest payments which would
be received if the principal amount of each installment of such Loan (or portion
thereof) so prepaid were re-invested, for the period from the date of such
prepayment to the original scheduled maturity date hereunder of such
installment, at the Reinvestment Rate (as defined below) (for purposes of this
Section 6.03, the "Reinvestment Interest"), the Borrower agrees to pay KfW a
prepayment commission in respect of each such prepayment in an amount (computed
as of the date of such prepayment) equal to the Present Value (as defined below)
of the amount of such excess.

                               KfW Loan Agreement



                                      -10-


          For purposes of this Section 6.03, "Reinvestment Rate" shall mean, in
respect of each installment of principal prepaid, the rate which appears on the
Reuters Screen RTRTSY1 Page at or about 4:00 p.m. (Frankfurt time) on a date
selected by KfW occurring on or within five Eurodollar Business Days prior to
the date of such prepayment, for actively traded U.S. Treasury obligations
having substantially the same scheduled maturity as such installment
(interpolating, where appropriate, between the yield to maturity quotations for
the next shorter and next longer maturities for any Loan installment scheduled
to mature at a time for which no such yield quotation is expressed); and the
"Present Value" of any amount receivable or deemed receivable on a specified
future date shall mean such amount discounted to present value (from such
specified future date to the date of such prepayment) at the Reinvestment Rate.

          6.04 Mandatory Prepayments. The Borrower shall make Mandatory
Prepayments as set forth in Section 3.06 of the Master Participation Agreement.
KfW may waive its right to receive any Mandatory Prepayments without prejudice
to its right to receive any subsequent Mandatory Prepayment. Each prepayment of
Loans under this Section 6.04 shall be accompanied by the prepayment
compensation (if any) required under Section 6.03 hereof and amounts (if any)
then payable under Section 3.11 of the Master Participation Agreement.

          In case of mandatory prepayments made in accordance with Section 3.06
of the Master Participation Agreement, the Borrower shall, upon KfW's demand,
prepay the outstanding Loans in full (or in the amount of the affected portion
thereof) together with accrued interest thereon and all other amounts payable to
KfW hereunder (including amounts, if any, payable under Section 6.03 hereof and
Section 3.11 of the Master Participation Agreement), in the case of each
outstanding Floating Rate Loan, on the last day of the then current Interest
Period for such Floating Rate Loan and, in the case of each outstanding Fixed
Rate Loan, on the first Payment Date occurring at least three months after the
date of such demand (or, in the case of any Loan, on such earlier date as shall
be certified by KfW as being the last permissible date for such prepayment under
the relevant law, rule, regulation, treaty or directive).

                                   ARTICLE VII

                                    PAYMENTS

          7.01 Payments. All payments and prepayments on account of the
principal of and interest on the Loans, fees, commissions, indemnities and other
amounts payable under this Agreement or any Promissory Note by the Borrower
shall be made to KfW in Dollars and in immediately available funds, without
set-off, counterclaim or reduction for any reason whatsoever, by credit to an
account designated by KfW at Citibank in New York, New York (Swift Code: BIC
CITIUS33, Account number: 10926093, Account name: KfW) and designating KfW in
Frankfurt am Main, Germany as the beneficiary (Swift Code: KFWIDEE, Payment
Reference: yyyymmdd/Cerro Verde (8137091719), not later than 11:00 a.m. New York
City time on the date on which such payment shall become due.

          7.02 Non-Business Days. If any payment under this Agreement falls due
on a day which is not a Business Day, the due date therefor shall be extended to
the next succeeding Business Day and interest shall be payable for any principal
so extended for the period of such extension.

                               KfW Loan Agreement



                                      -11-


          7.03 Computations. Interest hereunder calculated on the basis of the
quotations referred to in clause (a) and clause (b) of the definition of
"Applicable Base Rate" shall be computed on the basis of a year of 360 days and
actual days elapsed. Prepayment compensation under Section 6.04 hereof, shall be
computed on the basis of a year of 365 days (or 366 days, as the case may be)
and actual days elapsed. Commitment commission hereunder shall be computed on
the basis of a year of 360 days and actual days elapsed.

                                  ARTICLE VIII

                               CERTAIN INDEMNITIES

          8.01 Increased Cost of Loans. In the event that, at any time or from
time to time, as a result of any change in any applicable laws (including the
adoption of any new laws), rules, regulations, treaties, directives or requests
of general applicability of any applicable governmental, fiscal or monetary
authority (whether imposing or modifying taxation (other than Excluded Taxes and
Indemnified Taxes, provision for which is made in Section 8.01 hereof), reserve
or special or other deposit requirements or any other requirements or
conditions, and whether or not having the force of law), or in the
interpretation or administration thereof by any court or any such authority
charged with the interpretation or administration thereof (including, without
limitation, any change in the regulations implementing the proposals for a
risk-based capital framework described by the Basle Committee on Banking
Regulations and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards" dated July 1988, as
modified and supplemented), or by reason of KfW's compliance with any such law,
rule, regulation, treaty, directive or request, the cost to KfW of making,
maintaining or funding the Loans is increased, or any amount (or the effective
return on any amount) received or receivable by KfW hereunder or under the
Promissory Notes is reduced, or the rate of return to be earned by KfW with
respect to any Loan is reduced, or KfW is required to make any payment in
connection with any transactions contemplated hereby, by or in an amount
reasonably deemed by KfW to be material, then the Borrower will on demand by KfW
from time to time pay KfW such additional amount or amounts as (in the good
faith determination of KfW) are necessary to compensate KfW for such increased
cost, reduction or payment; provided that, KfW shall not be entitled to make any
claim for additional costs under this Section 8.01, to the extent any such
additional cost is attributable directly or indirectly to the application of,
compliance with or implementation of any part or "pillar" of the International
Convergence of Capital Measurement Standards: a Revised Framework, published by
the Basle Committee on Banking Supervision in June 2004 (as in effect on the
date hereof), or any implementation or interpretation thereof, whether by any
law or regulation, or otherwise, or to any change by KfW from one method of
calculating capital adequacy to another, insofar as such additional costs are
directly or indirectly attributable to credit-related events or circumstances
that are specific to KfW and not solely to general regulatory guidelines or
requirements imposed on the banking sector generally. Any such demand by KfW
shall be accompanied by a certificate from KfW stating the basis for its demand
and setting forth in reasonable detail the calculations of the amount thereof.

          8.02 Alternative Interest Rate. If, with respect to any Interest
Period for any Floating Rate Loan or with respect to any Default Interest
Period, KfW determines in its reasonable judgment that quotations of interest
rates of the types referred to in clause (a) in the

                               KfW Loan Agreement



                                      -12-


definition of "Applicable Base Rate" are not being provided in the relevant
amounts or for the relevant maturity for purposes of determining the "Applicable
Base Rate" for such Interest Period or Default Interest Period, KfW shall
promptly give notice thereof to the Borrower, and the following provisions shall
apply:

          (a) During the thirty-day period following the date of any such notice
     (the "Negotiation Period"), KfW and the Borrower will negotiate in good
     faith for the purpose of agreeing upon an alternative, mutually acceptable
     basis (the "Substitute Basis") for determining the rate of interest to be
     applicable to such Loan from time to time and if, at the expiration of the
     Negotiation Period, KfW and the Borrower have agreed upon a Substitute
     Basis and any required governmental approvals therefor have been obtained,
     the Substitute Basis shall take effect from such date (including, if
     agreed, such retroactive date) as KfW and the Borrower may in such
     circumstance agree.

          (b) If at the expiration of the Negotiation Period, a Substitute Basis
     shall not have been agreed upon or any required governmental approvals
     therefor shall not have been obtained, KfW shall notify the Borrower of the
     cost to KfW (as reasonably determined by it) of funding and maintaining the
     outstanding affected Loan for such Interest Period or Default Interest
     Period, and the interest payable to KfW on such Loan for such Interest
     Period or Default Interest Period shall be interest at a rate per annum
     equal to the cost of funding and maintaining such Loan as so notified by
     KfW plus the applicable Margin (and, as appropriate, the Default Margin).

The procedures specified in (a) and (b) above shall apply to each relevant
period succeeding the first such period to which they were applied unless and
until KfW notifies the Borrower that the condition referred to in the first
sentence of this Section 8.02 no longer exists (which notice KfW agrees to give
promptly following the cessation of such condition) or until each affected
Floating Rate Loan is converted into a Fixed Rate Loan pursuant to Section 2.04
hereof, whereupon interest on such Loan shall again be determined in accordance
with the provisions of Section 3.02 hereof, effective commencing on the first
Payment Date next succeeding the date of such notice or (if a Fixed Rate Period
is so established) the first day of such Fixed Rate Period.

          8.03 Mitigation. If an event or circumstance occurs that would entitle
KfW to exercise any of the rights or benefits afforded by this Article VIII,
KfW, promptly upon becoming aware of the same, shall take such steps as may be
reasonably available to it to eliminate or mitigate the effects of such event or
circumstance; provided, however, that KfW shall not be under any obligation to
take any steps that, in its sole discretion, would (a) result in its incurring
additional costs or taxes or (b) otherwise be disadvantageous to KfW.

                                   ARTICLE IX

                              CONDITIONS OF LENDING

          9.01 Initial Loan. The obligation of KfW to make the initial Loan to
be made by it hereunder is subject to the satisfaction (or waiver by KfW) of the
following conditions:

                               KfW Loan Agreement



                                      -13-


          (a) Satisfaction of Common Conditions Precedent. The common conditions
     precedent to the initial disbursement of the Senior Facility Loans set
     forth in Section 5.01 of the Master Participation Agreement shall have been
     satisfied (or waived as provided therein).

          (b) HERMES Guarantee. The HERMES Guarantee shall have been issued,
     shall be the legal, valid and binding obligation of HERMES (acting in its
     capacity as an agent of the government of the Federal Republic of Germany),
     shall be in full force and effect, shall have been duly registered with the
     relevant governmental or other authorities and all relevant fees and
     charges relating thereto which are then due and payable shall have been
     paid in full.

          (c) Export Contracts. The Export Contracts shall not have been
     cancelled, rescinded or terminated for reasons other than performance of
     their terms.

          (d) No modifications of Export Contracts. No modification of, or
     amendment to, the Export Contracts that will (i) reduce the total price of
     the Export Contracts below US$22,500,000 or (ii) change the Exporter under
     the Export Contracts, in each case without the prior consent of KfW.

          (e) Drawdown Certificate. Not less than 15 Business Days prior to the
     proposed date of borrowing, KfW shall have received a KfW Loan Agreement
     Drawdown Certificate in substantially the form set forth in Exhibit C
     hereof (a "Drawdown Certificate"), duly completed and executed by the
     Borrower and the Borrower shall have provided the Trustee and the
     Administrative Agent with a copy of such Drawdown Certificate.

          9.02 Additional Conditions. The obligation of KfW to make each Loan
(excluding the initial Loan which is subject to the conditions described in
Section 9.01 above) hereunder is subject to the further conditions:

          (a) Satisfaction of Common Conditions Precedent. The common conditions
     precedent set forth in Section 5.02 of the Master Participation Agreement
     shall have been satisfied (or waived as provided therein);

          (b) Drawdown Certificate. Not less than 15 Business Days prior to the
     proposed date of borrowing KfW shall have received a KfW Loan Agreement
     Drawdown Certificate in substantially the form set forth in Exhibit C
     hereof (a "Drawdown Certificate"), duly completed and executed by the
     Borrower and the Borrower shall have provided the Trustee and the
     Administrative Agent with a copy of such Drawdown Certificate; and

          (c) HERMES Guarantee. The HERMES Guarantee shall not have been
     revoked, canceled, restricted or suspended, unless such revocation,
     cancellation, restriction or suspension was directly and proximately caused
     by (i) the failure of KfW to pay any applicable guarantee fee after the
     Borrower has paid to KfW all amounts demanded in respect thereof pursuant
     to Section 4.03 hereof when due or

                               KfW Loan Agreement



                                      -14-


     (ii) misrepresentations by KfW to HERMES unless such misrepresentations
     were based upon information supplied to KfW in writing by the Borrower or
     the Parent Companies.

                                    ARTICLE X

                                    COVENANTS

          The Borrower has undertaken certain covenants as set forth in Article
VII of the Master Participation Agreement. The rights of KfW in respect of such
covenants are set forth in the Master Participation Agreement and Master
Security Agreement. The Borrower further covenants and agrees with KfW that it
shall use the loan proceeds solely in accordance with the terms of Section 2.01
hereof.

                                   ARTICLE XI

                         REPRESENTATIONS AND WARRANTIES

          The Borrower has given certain representations and warranties in
Article VI of the Master Participation Agreement. The rights of KfW in respect
of such representations and warranties are set forth in the Master Participation
Agreement and Master Security Agreement.

                                   ARTICLE XII

                           EVENTS OF DEFAULT; REMEDIES

          12.01 Events of Default. Subject to Section 12.02, each of the MPA
Events of Default set forth in Section 9.01 of the Master Participation
Agreement is hereby incorporated by reference in this Agreement as if fully set
forth herein, in accordance with their terms, unless waived in accordance with
the Master participation Agreement.

          12.02 Remedies. Upon the occurrence and Continuance of an MPA Event of
Default, KfW shall only have each of the rights and remedies provided in the
Master Participation Agreement and the Master Security Agreement exercisable
only pursuant to and in accordance with the terms thereof.

          12.03 Suspension, Cancellation or Termination of Commitment. In the
event that HERMES revokes, cancels, restricts or suspends the HERMES Guarantee
(other than by reason of improper acts or inactions on the part of KfW) then (i)
KfW shall have the right to suspend, cancel or terminate its Aggregate Committed
Amount, (ii) KfW shall not be required to disburse or fund any additional Loans
and (iii) the provisions of Section 3.10 of the Master Participation Agreement
shall apply.

                                  ARTICLE XIII

                                  MISCELLANEOUS

          13.01 No Waiver. No failure on the part of KfW to exercise, and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under this Agreement or the Promissory Notes shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power or
privilege under this Agreement or the Promissory Notes

                               KfW Loan Agreement



                                      -15-


preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. Except as expressly provided herein and in the Master
Participation Agreement, the remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

          13.02 No Immunity. To the extent that any party hereto has or
hereafter may acquire any immunity from any court or from jurisdiction of any
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement and the Promissory Notes.

          13.03 Jurisdiction and Service of Process. The provisions of Section
12.16 of the Master Participation Agreement shall be deemed incorporated herein
mutatis mutandis. The Borrower confirms its appointment of CT Corporation as
agent for process pursuant to Section 12.16(b) of the Master Participation
Agreement.

          13.04 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          13.05 Assignments and Participations; Information.

          (a) The Borrower may not assign its rights or obligations hereunder or
under the Promissory Notes without the prior consent of KfW.

          (b) KfW may at any time transfer the Loans, the Promissory Notes and
Commitments to a wholly-owned subsidiary of KfW whose jurisdiction is Germany,
and in the event of such transfer all references herein to "KfW" shall be deemed
to such wholly-owned subsidiary.

          (c) KfW may at any time sell, assign, transfer, grant participations
in, or otherwise dispose of a portion of the Loans, the Promissory Notes or the
Commitment (collectively, "Transferred Interests") (i) to any other Person
subject to Section 12.13 of the Master Participation Agreement or (ii) if an MPA
Event of Default has occurred and is continuing, to HERMES or any agency,
instrumentality or political subdivision of Germany (for purposes of this
Section 13.05, collectively, "HERMES" and, together with any transferee in
accordance with clause (i) of this Section 13.05(c), "Transferees"). Upon the
execution and delivery by any Transferee to the Borrower of an instrument in
writing pursuant to which such Transferee agrees to assume the obligations of
KfW hereunder with respect to the Transferred Interest, such Transfer will be
effective and such Transferee may exercise all legal and equitable rights and
remedies, and shall be entitled to the benefits of Article VII hereof, as if
such Transferee were a lender hereunder holding a "Loan" in the amount of the
Transferred Interest held by it.

          (d) KfW may furnish any information concerning the Borrower in the
possession of KfW from time to time to Transferees (including prospective
Transferees) subject

                               KfW Loan Agreement



                                      -16-


to the confidentiality provisions contained in Section 12.10 of the Master
Participation Agreement.

          (e) Notwithstanding anything in the Master Participation Agreement to
the contrary, KfW shall be entitled as and when required or requested by HERMES
to give information to the representatives of HERMES and international
organizations entrusted with the collection of statistical data, particularly in
connection with debt servicing, in connection with the implementation of this
Agreement.

          (f) Except as otherwise expressly provided in this Agreement, this
Agreement is legally independent of all Export Contracts. In connection with the
performance of its obligations under this Agreement, the Borrower may in no
event raise objections on the basis of the Export Contracts for which the
financing is in part provided or any other contract providing for the export of
goods or services.

          13.06 Amendments, Etc. Subject to Article X of the Master
Participation Agreement, the provisions of this Agreement may not be amended,
modified or waived except by an instrument or instruments in writing or by
facsimile transmission signed by the Borrower and KfW.

          13.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.

          13.08 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York, New York, U.S. is of
the essence, and Dollars shall be the currency of account in all events. The
obligations of the Borrower to make payments hereunder shall not be discharged
by an amount paid in any currency other than Dollars, whether pursuant to a
court or arbitral judgment or otherwise, to the extent that the amount so paid
upon conversion to Dollars and transferred to New York, New York under normal
banking procedures does not yield the amount of Dollars due, and the Borrower
hereby, as a separate obligation and notwithstanding any such judgment, agrees
to indemnify the Trustee, the Appointed Parties' Agents and each Senior Facility
Lender against, and to pay to the Trustee, the Appointed Parties' Agents and
each Senior Facility Lender on demand, in Dollars, any difference between the
sum originally due in Dollars and the amount of Dollars received upon any such
conversion and transfer. The provisions of Section 12.06 of the Master
Participation Agreement shall be deemed incorporated herein in their entirety.

          13.09 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Borrower and KfW and their respective permitted
successors and assigns.

          13.10 Stamp Taxes. The Borrower agrees to pay all stamp and other
duties or taxes imposed by any taxing authority of or in Peru on this Agreement,
the Loans or the Promissory Notes, or on the enforcement of any thereof or of
any rights under any thereof, or on the introduction of any thereof before any
court or other authority, and shall indemnify KfW against all liabilities,
costs, claims and expenses resulting from any failure to pay or delay in paying
any such duty or tax.

                               KfW Loan Agreement



                                      -17-


          13.11 Survival. Without limitation, the obligations of the Borrower
under Sections 6.03, 8.01 and 13.10 hereof and Sections 3.09 and 3.11 of the
Master Participation Agreement and the obligations of KfW under Section 3.09 of
the Master Participation Agreement shall survive the repayment of the Loans and
the cancellation of the Promissory Notes.

          13.12 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. Any gap resulting as a consequence of any
such invalidity shall be filled by a provision consistent with the purpose of
this Agreement.

          13.13 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND KfW HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE PROMISSORY NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY WHETHER BASED ON CONTRACT, TORT OR OTHER THEORY.

          13.14 Notices. The provisions of Section 12.11 of the Master
Participation Agreement shall be deemed incorporated herein in its entirety.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier and received or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.

          13.15 English Language. This Agreement is made in the English
language. Any translation of this Agreement shall have no legal validity.

          13.16 No Restriction. Nothing herein shall in any way limit the
Borrower's ability to seek damages from Exporter under any of the Export
Contracts if the goods delivered pursuant to the Export Contract do not meet
contract specifications set forth under such Export Contract.

                               KfW Loan Agreement



          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed.

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By: /s/ Cristian Moran
                                            ------------------------------------
                                        Name: Cristian Moran
                                        Title: Attorney in Fact

                               KfW Loan Agreement



                                        KFW


                                        By: /s/ Wolfgang Behler
                                            ------------------------------------
                                        Name: Wolfgang Behler
                                        Title: First Vice President


                                        By: /s/ Stephan Pueschel
                                            ------------------------------------
                                        Name: Stephan Pueschel
                                        Title: Senior Project Manager

                               KfW Loan Agreement



                                                                       EXHIBIT A
                                                           to KfW Loan Agreement

                              AMORTIZATION SCHEDULE



             % of the aggregate amounts
Repayment   of all Advances made by KfW
  Number            to be repaid
- ---------   ---------------------------
         
   1                    6.25
   2                    6.25
   3                    6.25
   4                    6.25
   5                    6.25
   6                    6.25
   7                    6.25
   8                    6.25
   9                    6.25
   10                   6.25
   11                   6.25
   12                   6.25
   13                   6.25
   14                   6.25
   15                   6.25
   16                   6.25


                               KfW Loan Agreement



                                                                       EXHIBIT B
                                                           to KfW Loan Agreement

                        Form of Promissory Note (Pagare)

                              PAGARE NO NEGOCIABLE

Place and date of issuance: Lima Peru, ____________
Amount US$ ____________

          FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde,
S.A.A. (the "Borrower"), a sociedad anonima abierta listed on the Lima Stock
Exchange and duly incorporated under the laws of the Republic of Peru,
registered with the Public Registry of Companies of Lima, under File No.
____________, and whose principal office is at ____________, Republic of Peru,
by this non negotiable (no negociable) promissory note ("pagare") (the
"Promissory Note"), except as permitted in Section 12.13 (b) of the MPA,
unconditionally promises to pay to the order of ____________ (the "Holder"),
against presentment of this note, the sum of ____________ dollars of the United
States of America (US$____________) (the "Principal Amount"), payable on the
dates set forth in the following payment schedule (each date, a "Payment Date")
and in the amounts indicated next to the applicable Payment Date, provided that
the principal amount to be paid to the Holder on a Payment Date shall not exceed
the principal amount hereof outstanding immediately prior to such Payment Date.



                       PRINCIPAL AMOUNT
    PAYMENT DATE         TO BE REPAID
- --------------------   ----------------
                    
First Payment Date       ____________

6th month after the      ____________
First Payment Date

12th month after the     ____________
First Payment Date

18th month after the     ____________
First Payment Date

24th month after the     ____________
First Payment Date

30th month after the     ____________
First Payment Date

36th month after the     ____________
First Payment Date

42nd month after the     ____________
First Payment Date

48th month after the     ____________
First Payment Date

54th month after the     ____________
First Payment Date

60th month after the     ____________
First Payment Date

66th month after the     ____________
First Payment Date

72nd month after the     ____________
First Payment Date

78th month after the     ____________
First Payment Date

84th month after the     ____________
First Payment Date

90th month after the     ____________
First Payment Date


          The Borrower also promises to pay to the Holder interest on the
outstanding and unpaid principal amount of this Promissory Note, from the date
hereof until the last Payment Date, at an annual rate of the Base Rate plus the
Applicable Margin (the "Interest Rate"), such

                               KfW Loan Agreement



                                      -2-


interest to accrue semiannually on the outstanding principal amount during the
Interest Period. Interest shall be payable in arrears on each Interest Payment
Date. All computations of interest shall be made on the basis of a year of 360
days and actual days elapsed.

          If any payment to be made hereunder is due on a day which is not a
Business Day, such payment shall be made on the immediately succeeding Business
Day.

          If the principal amount of this Promissory Note is not paid in full
when due, then, without prejudice to any other rights or remedies of the Holder,
such principal amount remaining unpaid shall carry default interest for such
period of time within each related Default Interest Period during which such
amount shall be due and unpaid, at an annual rate equal to the Default Rate.

          The Borrower may prepay on any Payment Date upon at least 60 days'
prior notice, all or part of the outstanding principal amount hereof, so long
as, in connection with a voluntary partial prepayment, the aggregate amount of
any such voluntary partial prepayment equals at least ____________(1) dollars of
the United States of America (US$____________).

          If Borrower prepays all or part of the outstanding principal amount
hereof [on a date other than the last day of the then current Interest
Period](2), the Borrower shall pay to the Holder [(a) a prepayment commission
equal to the Present Value of the excess (if any) of (i) the sum of the interest
payments which (in the absence of such prepayment) would have been payable on
each installment hereof (or portion thereof) so prepaid, on each Payment Date
from the date of such prepayment to the original scheduled maturity date of such
installment, at the Base Rate over (ii) the sum of the interest payments which
would be received if the principal amount of each installment hereof (or portion
thereof) so prepaid were re-invested, for the period from the date of such
prepayment to the original scheduled maturity date hereunder of such
installment, at the Reinvestment Rate (as defined below), and (b)](3)
reimbursement of its funding losses or expenses (if any) related to such
prepayment; provided that, if the Borrower makes a voluntary prepayment of all
or any portion of the principal outstanding amount hereof with the proceeds of
replacement debt obtained (either at the time or within a period of one year
from the date of such voluntary prepayment) from a person other than the Parent
Companies or an Affiliate of the Parent Companies, the Borrower shall, as of the
date that such replacement debt is obtained, pay to the Holder a prepayment fee
equal to 0.5% of the aggregate principal amount prepaid and provided further
that if the Holder suspends, cancels or terminates its commitments to lend to
the Borrower under the credit facility, as contemplated in Section 12.03 of the
Loan Agreement, the Borrower may prepay all or any portion of the outstanding
amount hereof without prepayment premium or penalty of any kind whatsoever.

          Each prepayment of the outstanding principal amount hereof shall
(unless such prepayment repays in full such outstanding principal amount) be
applied to prepay ratably each

- ----------
(1)  Insert pro rata amount of the minimum prepayment amount applicable to the
     Advance(s) evidenced by the Promissory Note.

(2)  Include this bracketed language only for Floating Rate Loans.

(3)  Include this bracketed language only for Fixed Rate Loans.

                               KfW Loan Agreement



                                      -3-


outstanding installment of principal hereof remaining to be paid as of the date
of such prepayment.

          For purposes of this Promissory Note, the following terms shall have
the following meanings:

          "Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.

          "Affiliate" means, with respect to any Person (the "First Person"),
any other Person (the "Second Person") which directly or indirectly Controls, or
is under common Control with, or is Controlled by, such First Person.

          "Applicable Margin" means 0.35% per annum.

          "Base Rate" means, for any Interest Period or Default Interest Period
therefor, [the interest rate per annum for dollar deposits for a period equal to
(or, if there is no equal, then most comparable to) such Interest Period or
Default Interest Period which appears on Reuters Screen LIBOR01 Page (or such
other page as may replace that page on that service for the purpose of
displaying the British Bankers Association Interest Settlement Rate) at or about
11:00 a.m. London time on the date two Eurodollar Business Days prior to the
first day of such Interest Period or Default Interest Period; provided that, if
no such rate appears on Reuters Screen LIBOR01 Page (or such other page as may
replace that page on that service for the purpose of displaying the British
Bankers Association Interest Settlement Rate) for any relevant Interest Period
or Default Interest Period, the Base Rate shall mean for each Loan during such
Interest Period or Default Interest Period the rate per annum determined by the
Holder which appears on the page designated Page 3750 on the Moneyline Telerate
Inc. at or about 11:00 a.m. London time on the date two Eurodollar Business Days
prior to the first day of such Interest Period or Default Interest Period](4)

          "Business Day" means a day on which banks are generally open for
business in London, England, New York, New York, United States, Tokyo, Japan,
Frankfurt am Main, Germany and Lima, Peru.

          "Collateral Agent" means Citibank del Peru S.A. in its capacity of
onshore collateral agent for the Holder according to the MSA.

          "Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.

          "Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.

- ----------
(4)  Insert (i) this bracketed language for Floating Rate Loans or (ii) the
     Fixed Rate calculated in accordance with clause (b) of the definition of
     Applicable Base Rate.

                               KfW Loan Agreement



                                      -4-


          "Control" (including, with its correlative meanings "Controlled by"
and "under common Control with") means possession, directly or indirectly, of
power (whether or not exercised) to direct or cause the direction of or exercise
a controlling influence on management or policies (whether through legal or
beneficial ownership of securities or partnership or other ownership interests,
by contract, representation on the board of directors or similar governing body
or otherwise).

          "Default Interest Period" means each successive period (not in excess
of six months) while any amount payable by the Borrower hereunder is in default,
as the Holder shall choose in its sole discretion, the first such period to
commence as of the date on which such amount in default becomes due and each
succeeding such period to commence immediately upon the expiry of the
immediately preceding such period.

          "Default Rate" means the applicable Interest Rate (including the
Applicable Margin) plus 2% per annum.

          "Eurodollar Business Day" means any day on which banks are generally
open for business in London, England.

          "First Payment Date" means the earlier of (i) the March 20 or the
September 20 next occurring after the Commercial Production Start-up Date, and
(ii) March 20, 2008.

          "Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.

          "Governmental Authority" means any national, state, county, city,
town, village, municipal or other local governmental department, commission,
board, bureau, agency, authority or instrumentality of any nation that affects
or may affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.

          "Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.

          "Interest Period" means any of the following periods:

               (i) on or prior to the First Payment Date, each period commencing
     on an Interest Payment Date (or with respect to the first Interest Period
     on the date hereof) and ending on the day immediately preceding the next
     succeeding Interest Payment Date (including the first day and the last day
     of such period); and

                               KfW Loan Agreement



                                      -5-


               (ii) thereafter, each period commencing on a Payment Date and
     ending on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

          "Loan Agreement" means the Loan Agreement dated as of September 30,
2005 between the Borrower and KfW.

          "MPA" means the Master Participation Agreement dated as of September
30, 2005 entered into among the Borrower, Japan Bank For International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia, and Mizuho Corporate Bank, Ltd.

          "MSA" means the Master Security Agreement dated as of September 30,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.

          "Parent Companies" means, collectively, Phelps Dodge Corporation,
Sumitomo Metal Mining Co. Ltd., Sumitomo Corporation and Compania de Minas
Buenaventura S.A.A.

          "Peruvian Income Tax Act" means the Legislative Decree 774 of December
31, 1993, as amended.

          "Present Value" of any amount receivable or deemed receivable on a
specified future date, means such amount discounted to present value (from such
specified future date to the date of such prepayment) at the Reinvestment Rate.

          "Reinvestment Rate" means, in respect of each installment of principal
prepaid, the rate which appears on the Reuters Screen RTRTSY1 Page at or about
4:00 p.m. (Frankfurt time) on a date selected by the Holder occurring on or
within five Eurodollar Business Days prior to the date of such prepayment, for
actively traded U.S. Treasury obligations having substantially the same
scheduled maturity as such installment (interpolating, where appropriate,
between the yield to maturity quotations for the next shorter and next longer
maturities for any Loan installment scheduled to mature at a time for which no
such yield quotation is expressed).

          "Reuters Screen LIBOR01 Page" shall mean the display page so
designated on the Reuter Monitor Money Rates Service (or such other page as may
replace that page on that service for the purpose of displaying London interbank
offered rates for Dollar deposits).

          "Sulfide Project" means the Borrower's development of a primary
sulfide portion of the ore body beneath the oxide portion of the ore body
currently in production at its Cerro Verde copper mine, located in the Districts
of Uchumayo and Yarabamba, Province of Arequipa, Peru.

                               KfW Loan Agreement



                                      -6-


          "Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.

          All payments by the Borrower of principal and interest hereunder shall
be made in dollars of the United States of America and in immediately available
funds, without set-off, counterclaim or reduction for any reason whatsoever, by
credit to an account designated by the Holder at Citibank in New York, New York
(Swift Code: BIC CITIUS33, Account number: 10926093, Account name: KfW) and
designating the KfW in Frankfurt am Main, Germany as the beneficiary (Swift
Code: KFWIDEE, Payment Reference: yyyymmdd/Cerro Verde (8137091719), not later
than 11:00 a.m. New York City time on the date on which such payment shall
become due.

          Any and all payments made by or on account of the Borrower in respect
of any obligation hereunder shall be made free and clear of, and without
deduction or withholding for or on account of, any and all present or future
Taxes (excluding (i) Taxes imposed on or measured by the net income, profits, or
capital of the Holder by the jurisdiction under the laws of which the Holder was
incorporated or organized, (ii) Taxes which would not have been imposed on the
Holder but for a change by the Holder of its lending office, (iii) Taxes which
would not have been imposed on a Holder but for the transfer by the Holder of an
interest herein or (iv) Taxes which would not have been imposed on a Holder but
for such Holder's having a place of business in the jurisdiction imposing the
Tax (other than a place of business arising from the transaction contemplated
hereby or from having executed, delivered, performed its obligations or received
a payment hereunder, or enforced its rights hereunder)), Taxes described in the
immediately preceding clauses (i) through (iv) being referred to herein as the
"Excluded Taxes" and Taxes other than the Excluded Taxes being referred to
herein as "Indemnified Taxes", now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority of the Republic of Peru,
unless such deduction or withholding is required by an applicable Government
Rule, in which case the following paragraph shall apply.

          If the Borrower shall be required by law to deduct any Indemnified
Taxes now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.

          The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.

                               KfW Loan Agreement



                                      -7-


          The Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of the Courts of Downtown Lima (Lima-Cercado) and of any Federal or
State court located in the Borough of Manhattan, The City of New York, as the
Holder hereof may elect for any proceeding arising out of or relating to this
Promissory Note. The Borrower waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.

          The Parties further agree that, without prejudice to the law of the
State of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.

          This Promissory Note is issued in Spanish and English. The Parties
agree that the applicable version of this Promissory Note will be (i) the
Spanish version in case the jurisdiction of the Courts of Downtown Lima
(Lima-Cercado) is the jurisdiction elected by the Holder, or be (ii) the English
version in case the jurisdiction of any Federal or State court located in the
Borough of Manhattan, The City of New York is the jurisdiction elected by the
Holder. In case of discrepancies between the Spanish and English versions (i)
the Spanish version shall prevail when the Courts of Downtown Lima
(Lima-Cercado) or other Spanish speaking jurisdiction is the jurisdiction
elected by the Holder, and (ii) the English version shall prevail when the
Federal or State court located in the Borough of Manhattan, The City of New York
or any other non-Spanish speaking jurisdiction is the jurisdiction elected by
the Holder.

Lima, ____________

By: Sociedad Minera Cerro Verde, S.A.A.
Taxpayer Registry No.: 20170072465
Name of authorized officer: ____________
Identification Card No ____________
Power register in Entry No. ____________ of the Public Registry

                               KfW Loan Agreement



                                                                       EXHIBIT C

                                                           to KfW Loan Agreement

                         [Form of Drawdown Certificate]

To:   KfW IPEX-Bank
      Postfach 11 11 41
      D-60 046 Frankfurt/Main
From: SOCIEDAD MINERA CERRO VERDE S.A.A.
                                                            Date: ______________

                               KFW LOAN AGREEMENT
                             Request for drawing no.

X1a1 - Loan No. [____________]
       dated as of [____________]
                for US$[____________]

1.   The Borrower hereby requests a [Floating Rate / Fixed Rate] Loan under the
     KfW Loan Agreement in US$ as follows:

     (a) Drawdown Date: _____________

     (b) Amount: US$_____________

2.   The Amount in paragraph 1(b) is made up of:

     (a)  US$ in respect of German goods and services supplied by Polysius AG;
          and/or

     [(b) US$ in respect of the Facility Fee charged by HERMES for the HERMES
          Guarantee](5)

3.   The Borrower confirms that:

     (a)  the representation and warranties contained in Article VI of the
          Master Participation Agreement shall be true and correct in all
          material respects as of the date of the initial disbursement;

     (b)  no MPA Default has occurred and is Continuing; and

     (c)  each of the other conditions contained in [Section 5.01 [first
          disbursement only], [Section 5.02 [Conditions Precedent for subsequent
          disbursements only] of the Master Participation Agreement and [Section
          9.01 [initial disbursement only], [Section 9.02 [Conditions Precedent
          for subsequent disbursements only] of the KfW Loan Agreement is
          satisfied on the date of this Request or is expected to be satisfied
          immediately after the disbursement is made (as applicable).

4.   The Borrower confirms that the aggregate amount borrowed under the KfW Loan
     Agreement does not exceed 85% of the aggregate amounts of the purchase
     orders placed to date under the Export Contracts plus the amounts borrowed
     to finance the Facility Fee.

5.   The Borrower requests that the amount mentioned under paragraph 1(b) above
     be paid to the Onshore Dollars Account.

6.   Terms defined in the KfW Loan Agreement shall bear the same meanings when
     used in this Request.

- ----------
(5)  [Only applies to disbursement of the initial Advance and shall include 100%
     of the Facility Fee.]

                               KfW Loan Agreement



                                       -2-


                                        BORROWER


                                        By:
                                            ------------------------------------
                                        Authorized Signatory

                               KfW Loan Agreement

EX-10.7

                                                                    Exhibit 10.7

                                                                  EXECUTION COPY

================================================================================

                                 LOAN AGREEMENT

                                      among

                       SOCIEDAD MINERA CERRO VERDE S.A.A.,
                                   as Borrower

                        EACH OF THE LENDERS NAMED HEREIN,

                                       and

                             CALYON NEW YORK BRANCH,
                             as Administrative Agent

                         Dated as of September 30, 2005

================================================================================



                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                      
Section 1.  Definitions and Accounting Matters...........................     1
   1.01  Certain Defined Terms...........................................     1
   1.02  Other Definitions; Headings.....................................     4
   1.03  Reference to Master Participation Agreement.....................     4
   1.04  Interpretation..................................................     5

Section 2.  Loans, Promissory Notes and Prepayments......................     5
   2.01  Loans...........................................................     5
   2.02  Borrowings......................................................     5
   2.03  Agent and Other Fees............................................     6
   2.04  Commitment Fees.................................................     6
   2.05  Lending Offices.................................................     6
   2.06  Several Obligations; Remedies Independent.......................     6
   2.07  Promissory Notes................................................     6
   2.08  Voluntary Prepayments of Loans..................................     6
   2.09  Pro Rata Prepayments............................................     6
   2.10  Change in Commitments...........................................     7
   2.11  Mandatory Prepayments...........................................     7

Section 3.  Payments of Principal and Interest...........................     7
   3.01  Repayment of Loans..............................................     7
   3.02  Interest........................................................     8

Section 4.  Payments; Pro Rata Treatment; Computations; Etc..............     8
   4.01  Payments........................................................     8
   4.02  Pro Rata Treatment..............................................     9
   4.03  Computations....................................................     9
   4.04  Certain Notices.................................................     9
   4.05  Non-Receipt of Funds by the Administrative Agent................    10

Section 5.  Yield Protection, Etc........................................    11
   5.01  Additional Costs................................................    11
   5.02  Alternate Interest Rate.........................................    13
   5.03  Compensation....................................................    14
   5.04  Mitigation......................................................    15
   5.05  Applicable Lending Offices......................................    15



                                      -i-



                                                                      
Section 6.  Conditions Precedent.........................................    15
   6.01  Initial Loans...................................................    15
   6.02  Additional Conditions...........................................    15

Section 7.  Representations and Warranties...............................    15

Section 8.  Covenants....................................................    15

Section 9.  Events of Default; Remedies..................................    15
   9.01  Events of Default...............................................    15
   9.02  Remedies........................................................    16

Section 10. The Administrative Agent.....................................    16
   10.01 Appointment, Powers and Immunities..............................    16
   10.02 Reliance by Administrative Agent................................    17
   10.03 Defaults........................................................    17
   10.04 Indemnification.................................................    17
   10.05 Non-Reliance on Administrative Agent and Other Lenders..........    18
   10.06 Failure to Act..................................................    18
   10.07 Resignation or Removal of Administrative Agent..................    18
   10.08 Voting..........................................................    19
   10.09 Administrative Agent Notices....................................    19

Section 11. Miscellaneous................................................    19
   11.01 Waiver..........................................................    19
   11.02 Notices.........................................................    20
   11.03 Amendments, Etc.................................................    21
   11.04 Successors and Assigns..........................................    21
   11.05 Assignments and Participations..................................    22
   11.06 Survival/Reinstatement..........................................    22
   11.07 No Immunity.....................................................    23
   11.08 Counterparts....................................................    23
   11.09 GOVERNING LAW AND SUBMISSION TO JURISDICTION....................    23
   11.10 WAIVER OF JURY TRIAL............................................    23
   11.11 Judgment Currency...............................................    23
   11.12 Severability....................................................    23
   11.13 English Language................................................    23



APPENDIX 1 - Notice of Borrowing

EXHIBIT A  - Form of Promissory Note
EXHIBIT B  - Amortization Schedule
EXHIBIT C  - Assignment and Acceptance Agreement


                                      -ii-



          LOAN AGREEMENT dated as of September 30, 2005 among SOCIEDAD MINERA
CERRO VERDE S.A.A., a sociedad anonima abierta organized under the laws of Peru
(the "Borrower"); each of the Lenders that is a signatory hereto as a "Lender",
or each lender that may from time to time become a Lender, pursuant to Section
11.05(b) hereof, (each, a "Lender" and, collectively, the "Lenders"); and CALYON
NEW YORK BRANCH, as agent for the Lenders (in such capacity, the "Administrative
Agent").

          WHEREAS, On the date hereof, the Borrower, JBIC, the Lead JBIC
Arrangers, KfW, the Lenders and the Administrative Agent have entered into the
Master Participation Agreement (the "Master Participation Agreement"), which
sets forth various terms for the financing of the development of the Sulfide
Project;

          WHEREAS, for purposes of financing in part the development of the
Sulfide Project, the Borrower desires that the Lenders make certain loans to it,
and the Lenders wish to make certain loans to the Borrower, all on the terms and
conditions set forth herein and in the Master Participation Agreement.

          NOW THEREFORE, in consideration of the foregoing, the agreements
contained herein and in the Master Participation Agreement and for other good
and valid consideration, the receipt and adequacy of which are hereby expressly
acknowledged, the parties hereto agree as follows:

          Section 1. Definitions and Accounting Matters.

          1.01 Certain Defined Terms. Except as otherwise defined herein,
capitalized terms used herein (including the preamble and recital of this
Agreement) shall have the meanings assigned to such terms in the Master
Participation Agreement (including Schedule Z thereto). For purposes of this
Agreement, the following terms shall have the respective meanings set forth
below:

          "Additional Costs" has the meaning assigned thereto in Section
5.01(a).

          "Advance Date" has the meaning assigned thereto in Section 4.05.

          "Agreement" means this Loan Agreement.

          "Applicable Lending Office" means, for each Lender, the "Lending
Office" of such Lender (or of an affiliate of such Lender) designated on the
signature pages hereof or such other office of such Lender (or of an affiliate
of such Lender) as such Lender may from time to time designate pursuant to
Section 5.05 as the office by which its Loans are to be made and maintained.

          "Availability Period" means, collectively, the Tranche A Availability
Period and the Tranche B Availability Period.

          "Borrower" has the meaning assigned thereto in the first paragraph of
this Agreement.

                         Commercial Banks Loan Agreement



                                       -2-


          "Borrowing" means Loans made on the same date and as to which a single
Interest Period is in effect pursuant to a Notice of Borrowing.

          "Commitment" means the aggregate of the Tranche A Commitment and the
Tranche B Commitment.

          "Default Interest Period" means each successive period (not in excess
of six months) as the Administrative Agent shall choose (with the consent of the
Majority Bank Lenders), during which any amount payable by the Borrower
hereunder is in default. The first such period shall commence as of the date on
which such amount in default becomes due, and each such succeeding period shall
commence immediately upon the expiry of the immediately preceding period;
provided, however, that in the absence of, or pending consent of the Majority
Bank Lenders, each Default Interest Period has a duration of one month.

          "Default Margin" means, in respect of any principal of any Loan or any
other amount under this Agreement (including interest on a Loan), a rate per
annum equal to 2%.

          "Eurocurrency Liabilities" has the meaning assigned thereto in
Regulation D.

          "Lenders" has the meaning assigned thereto in the first paragraph of
this Agreement.

          "LIBOR Rate" means, with respect to any Interest Period or Default
Interest Period for any Loan, the interest rate per annum for deposits in
Dollars, if any, for a period equal to the relevant interest period which
appears on page 3750 on the Moneyline Telerate Inc. (or such other page or pages
as shall replace that page or pages for the purpose of displaying offered rates
of leading banks for London interbank deposits in Dollars) at or about 11:00
a.m. London time on the second Eurodollar Business Day before and for value on
the first day of the Interest Period or Default Interest Period. If such rate
does not appear on page 3750 on the Moneyline Telerate Inc. or such other page
as shall replace that page for the purpose of displaying offered rates of
leading banks for London interbank deposits in Dollars, the LIBOR Rate shall be
the interest per annum equal to the average (rounded upward to the nearest fifth
decimal place, if such average is not such a decimal) of the interest rates per
annum (as provided to the Administrative Agent) at which deposits in Dollars are
offered by the principal office of each of the Reference Banks in London,
England to prime banks in the London interbank market at or about 11:00 a.m.
(London time) (or as soon thereafter as practicable) two Eurodollar Business
Days before the first day of the Interest Period or Default Interest Period in
an amount substantially equal to each such Reference Bank's Loan comprising part
of such borrowing to be outstanding during such interest period and for a period
equal to (or if there is no equal, then most comparable) such interest period.
The LIBOR Rate for any interest period for each Loan comprising part of the same
borrowing shall be determined by the Administrative Agent on the basis of
applicable rates furnished to and received by such agent from the Reference
Banks two Eurodollar Business Days before the first day of such interest period.
If any of the Reference Banks shall be unable or otherwise fails to provide a
rate for the purposes of determining LIBOR as hereinabove provided, then LIBOR
shall be determined on the basis of the rate or rates quoted by the remaining
Reference Banks.

                         Commercial Banks Loan Agreement



                                      -3-


          "LIBOR Reserve Period" has the meaning assigned to that term in
Section 5.01(d).

          "Loans" means, collectively, the Tranche A Loans and the Tranche B
Loans provided to the Borrower pursuant to Section 2.01.

          "Majority Bank Lenders" means Lenders holding more than 50% of the sum
of (a) the aggregate amount of uncancelled and undrawn Commitments and (b) the
aggregate principal amount of outstanding Loans.

          "Margin" means (a) for the period from and including the date hereof
to but excluding the Completion Release Date, 1.20% per annum, (b) for the
period from and including the Completion Release Date to but excluding the third
anniversary of the Completion Release Date, 1.4% per annum, (c) for the period
from and including the third anniversary of the Completion Release Date to but
excluding the fifth anniversary of the Completion Release Date, 1.70% per annum,
(d) for the period from and including the fifth anniversary of the Completion
Release Date to but excluding the seventh anniversary of the Completion Release
Date, 2% per annum and (e) for the period from and including the seventh
anniversary of the Completion Release Date thereafter, 2.20% per annum.

          "Master Participation Agreement" has the meaning assigned thereto in
the recitals of this Agreement.

          "Participant" has the meaning assigned thereto in Section 11.05(c).

          "Reference Banks" means, collectively CALYON New York Branch, Mizuho
Corporate Bank Ltd., Scotia Capital and The Royal Bank of Scotland plc, or such
substitute banks designated as such by the Administrative Agent from time to
time to provide the quotations required for the determination of the LIBOR Rate
and being the principal London offices of each such bank.

          "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System of the United States (or any successor), as the same may
be modified and supplemented and in effect from time to time.

          "Regulatory Change" means, with respect to any Lender, any change
after the date of this Agreement in any law or regulations or the adoption or
making after such date of any interpretation, directive or request applying to a
class of financial institutions including such Lender of or under any law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.

          "Substitute Basis" has the meaning assigned thereto in Section 5.02.

          "Tranche A Availability Period" means the period from the date hereof
until the Tranche A Commitment Termination Date.

                         Commercial Banks Loan Agreement



                                      -4-


          "Tranche A Commitment" means, for each Lender, the obligation of such
Lender to make Tranche A Loans to the Borrower in an aggregate principal amount
not to exceed the amount set forth opposite the name of such Lender in Appendix
A-1 of the Master Participation Agreement (as the same may be reduced at any
time or from time to time pursuant to Sections 2.01, 2.10 and 11.05 hereof and
Section 2.03 of the Master Participation Agreement or pursuant to a permitted
assignment) or, in the case of an assignee of a Tranche A Commitment, the amount
specified in the Assignment and Acceptance Agreement entered into by such
assignee.

          "Tranche A Commitment Termination Date" means the earlier of (i) the
Availability Period End Date and (ii) the date on which the aggregate amount of
the Tranche A Commitments of all Lenders is fully borrowed, terminated or
reduced to zero.

          "Tranche A Loans" has the meaning assigned thereto in Section 2.01.

          "Tranche B Availability Period" means the period from the date on
which the Tranche A Loans shall have been fully drawn until the Tranche B
Commitment Termination Date.

          "Tranche B Commitment" means, for each Lender, the obligation of such
Lender to make Tranche B Loans to the Borrower in an aggregate principal amount
not to exceed the amount set forth opposite the name of such Lender in Appendix
A-1 of the Master Participation Agreement (as the same may be reduced at any
time or from time to time pursuant to Sections 2.01, 2.10 and 11.05 hereof and
Section 2.03 of the Master Participation Agreement or pursuant to a permitted
assignment) or, in the case of an assignee of a Tranche B Commitment, the amount
specified in the Assignment and Acceptance Agreement entered into by such
assignee.

          "Tranche B Commitment Termination Date" means the earlier of (i) the
Availability Period End Date and (ii) the date on which the aggregate amount of
the Tranche B Commitments of all Lenders is fully borrowed, terminated or
reduced to zero.

          "Tranche B Loans" has the meaning assigned thereto in Section 2.01.

          1.02 Other Definitions; Headings. The table of contents to this
Agreement and section headings contained herein are for convenience of reference
only and shall not affect the construction hereof.

          1.03 Reference to Master Participation Agreement. This Agreement and
the Master Participation Agreement shall be viewed as, and shall constitute, one
agreement governing the terms and conditions of the Loans; provided that the
exercise of enforcement remedies shall be made solely pursuant to and in
accordance with the Master Participation Agreement and the Master Security
Agreement. In the event of conflict between this Agreement and the Master
Participation Agreement or the Master Security Agreement, the Master
Participation Agreement or the Master Security Agreement, as the case may be,
shall prevail.

                         Commercial Banks Loan Agreement



                                      -5-


          1.04 Interpretation. Section 1.02 of the Master Participation
Agreement is hereby incorporated herein by reference as if fully set forth
herein.

          Section 2. Loans, Promissory Notes and Prepayments.

          2.01 Loans.

          (a) Subject to the terms and conditions of this Agreement and the
Master Participation Agreement, each Lender severally agrees to make loans to
the Borrower in Dollars from time to time during the Tranche A Availability
Period (the "Tranche A Loans") in an aggregate principal amount up to but not
exceeding the amount of the Tranche A Commitment of such Lender. If the full
amount of the Tranche A Commitment is not disbursed during the Tranche A
Availability Period, the amount of any undrawn portion thereof shall be
automatically reduced to zero as provided in Section 2.03 of the Master
Participation Agreement.

          (b) Subject to the terms and conditions of this Agreement and the
Master Participation Agreement, each Lender severally agrees to make loans to
the Borrower in Dollars from time to time during the Tranche B Availability
Period (the "Tranche B Loans") in an aggregate principal amount up to but not
exceeding the amount of the Tranche B Commitment of such Lender. If the full
amount of the Tranche B Commitment is not disbursed during the Tranche B
Availability Period, the amount of any undrawn portion thereof shall be
automatically reduced to zero as provided in Section 2.03 of the Master
Participation Agreement.

          (c) Any amounts borrowed and paid or prepaid in accordance with the
terms herein shall not be reborrowed by the Borrower.

          2.02 Borrowings. The Borrower shall give the Administrative Agent (who
shall promptly notify the Lenders) notice of each Borrowing hereunder (which
notice shall be copied to the Trustee and shall be irrevocable and effective
upon receipt) as provided in Section 4.04, such notice to be substantially in
the form of Appendix 1 to this Agreement. Except as to a Borrowing which
utilizes the unborrowed Tranche A Commitments or Tranche B Commitments, as the
case may be, in full, each Borrowing hereunder shall be in a minimum amount of
US$2,500,000 and, if greater, in an amount which is an integral multiple of
US$1,000,000.

          Not later than 10:00 a.m. New York time on the date specified in each
notice for borrowing hereunder, each Lender shall make available the aggregate
amount of the Loans to be made by it on such date (as determined in accordance
with Section 4.02) to the Administrative Agent, at account number
01-88179-3701-00 (Attn: Loan Settlement, Ref: Cerro Verde) maintained by the
Administrative Agent with CALYON New York Branch (ABA# 026-008-073) in
immediately available funds. The amount so received by the Administrative Agent
shall, subject to the terms and conditions of this Agreement and the Master
Participation Agreement, be made available to the Borrower by 11:00 a.m. New
York time on such date, by depositing such amount, in immediately available
funds, in the Onshore Dollars Account.

                         Commercial Banks Loan Agreement



                                      -6-


          2.03 Agent and Other Fees. The Borrower shall pay to the
Administrative Agent, for its own account, the Administrative Agent's fee, and
to the Lenders (as Lead Arrangers) the upfront fees, each in the amounts set
forth in the fee letter dated July 28, 2005 between the Lenders and the Borrower
on the dates set forth in such fee letter.

          2.04 Commitment Fees. The Borrower shall pay to the Administrative
Agent for the account of each Lender a commitment fee on the daily average
unused amount of such Lender's Tranche A Commitment and Tranche B Commitment,
for the period from and including the date hereof to but excluding the final day
of the Tranche A Availability Period and the Tranche B Availability Period, as
the case may be, at a rate per annum equal to 0.375%. Accrued commitment fees
shall be payable quarterly in arrears on each Interest Payment Date, on each
date falling three calendar months after each Interest Payment Date and, in the
case of the last installment of commitment fees payable hereunder, on the last
day of the Tranche A Availability Period and the Tranche B Availability Period,
as the case may be.

          2.05 Lending Offices. The Loans made by each Lender shall be made and
maintained at such Lender's Applicable Lending Office.

          2.06 Several Obligations; Remedies Independent. The amounts payable by
the Borrower at any time hereunder and under the Promissory Notes to each Lender
shall be separate and independent obligations of the Borrower and each Lender
shall be entitled, in accordance with the Master Participation Agreement, to
protect and enforce its rights arising out of this Agreement and the Promissory
Notes held by it, and, except as otherwise provided in the Master Participation
Agreement, it shall not be necessary for any other Lender or the Administrative
Agent to consent to, or be joined as an additional party in, any proceedings for
such purposes.

          2.07 Promissory Notes. As additional evidence of the Borrower's
obligation to pay the principal of the Loans as provided herein, the Borrower
shall execute and deliver to the Administrative Agent on behalf of each Lender,
Promissory Notes issued by the Borrower, in substantially the form set forth in
Exhibit A hereto, with a dual column translation into Spanish to be included
therein, in accordance with Section 2.08 of the Master Participation Agreement.

          2.08 Voluntary Prepayments of Loans. The Borrower shall have the right
to prepay Loans, either in whole or in part, in accordance with Section 3.05 of
the Master Participation Agreement, at any time or from time to time. Each
prepayment of Loans under this Section 2.08 shall be accompanied by the
prepayment compensation (if any) required under Section 3.11 of the Master
Participation Agreement. Any prepayment made by the Borrower pursuant to
Sections 2.08, 2.09 and 2.11 shall be made together with all accrued but unpaid
interest on amounts prepaid and all other amounts (including any amounts due
pursuant to Section 5) then due from the Borrower hereunder. Partial prepayment
shall be applied to the Loans in accordance with Section 3.08 of the Master
Participation Agreement.

          2.09 Pro Rata Prepayments. The extent to which prepayments by the
Borrower to any Senior Lender in respect of the Senior Loan Obligations must be
a Pro Rata Payment shall be determined in accordance with Section 3.04 of the
Master Participation Agreement. A Lender may waive its right to receive any such
prepayment without prejudice to its right to receive any

                         Commercial Banks Loan Agreement



                                      -7-


subsequent prepayment. Each prepayment of Loans shall be accompanied by the
prepayment compensation (if any) required under Section 3.11 of the Master
Participation Agreement and shall be applied in accordance with the Master
Participation Agreement. Amounts prepaid pursuant to this Section 2.09 may not
be reborrowed by the Borrower.

          2.10 Change in Commitments.

          (a) Commitments Generally. The Borrower shall have the right to
terminate or reduce the aggregate unused amount of the Commitment subject to and
in accordance with Section 2.03 of the Master Participation Agreement.

          (b) Tranche B Loan Commitments. On the date on which the Borrower
issues Peruvian Bonds under the Peruvian Bonds Program, the Borrower shall
reduce the aggregate unutilized amount of Tranche B Commitments outstanding on
such date in an amount equal to the lesser of: (i) the aggregate amount of the
Peruvian Bonds issuance and (ii) the aggregate unutilized amount of Tranche B
Commitments outstanding on such date. To the extent that the aggregate proceeds
of issuance of the Peruvian Bonds on such date exceeds the aggregate unutilized
amount of Tranche B Commitments outstanding on such date, the Borrower shall
prepay the Tranche B Loans outstanding (together with interest accrued and
payable thereon) in an amount equal to the difference between (x) the aggregate
proceeds of issuance of the Peruvian Bonds on such date and (y) the aggregate
unutilized amount of Tranche B Commitments outstanding on such date.

          (c) No Reinstatement. Any portion of the Commitments once terminated
or reduced may not be reinstated.

          2.11 Mandatory Prepayments.

          (a) Loans. The Borrower shall be obligated to prepay the Loans
pursuant to Section 3.06 of the Master Participation Agreement.

          (b) Peruvian Bonds Program. On the date on which the Borrower issues
Peruvian Bonds under the Peruvian Bonds Program, the Borrower shall prepay the
Tranche B Loans in the principal amount required under Section 2.10(b).

          Section 3. Payments of Principal and Interest.

          3.01 Repayment of Loans. The Borrower hereby promises to pay to the
Administrative Agent, for the account of the Lenders, the principal amount of
the Loans in consecutive semi-annual installments payable commencing on the
first Payment Date and on each subsequent Payment Date thereafter, each such
installment to be in an aggregate principal amount computed in accordance with
the Amortization Schedule set forth in Exhibit B (which Amortization Schedule
may be revised by the Administrative Agent from time to time to take into
account (a) prepayments of the Loans pursuant to the terms hereof and the Master
Participation Agreement and (b) the actual first Payment Date); provided,
however, that the

                         Commercial Banks Loan Agreement



                                      -8-


amount of the final payment of principal of the Loans shall in any event be
equal to the remaining unpaid principal amount of the Loans.

          3.02 Interest.

          (a) The Borrower hereby promises to pay to the Administrative Agent,
for the account of each Lender, interest on the unpaid principal amount of the
Loan from such Lender for the period from and including the date of such Loan to
but excluding the date such Loan shall be paid in full, at a rate per annum
equal to, for each Interest Period, the LIBOR Rate for such Loan for such
Interest Period plus the applicable Margin.

          (b) The Borrower agrees that during the Continuance of any MPA Event
of Default under Section 9.01 of the Master Participation Agreement (other than
an MPA Event of Default under Section 9.01(a) of the Master Participation
Agreement relating to this Agreement), the interest rate per annum which the
Borrower is obligated to pay in respect of each Interest Period pursuant to
sub-Section (a) above shall be increased by adding to such interest rate the
Default Margin.

          (c) Accrued interest on each Loan shall be payable on each Interest
Payment Date and upon any prepayment of a Loan (on the prepaid amount). Promptly
after the determination of any interest rate provided for herein or any change
therein, the Administrative Agent shall give notice thereof to each of the
Lenders and the Borrower.

          (d) If any installment of principal of any Loan or any other amount
(including interest on a Loan) payable hereunder is not paid in full when due
(whether at the stated due date, by acceleration, by mandatory prepayment or
otherwise), the Borrower hereby agrees to pay from time to time upon demand
interest on the amount past due and unpaid for such period of time within each
related Default Interest Period during which such amount shall remain due and
unpaid, at a rate per annum equal to (i) in respect of principal, the Default
Margin plus the greater of (A) the rate of interest payable in respect of such
principal pursuant to Section 3.02(a) (or, if applicable, Section 5.02) in
effect immediately prior to such default in payment and (B) the sum of the LIBOR
Rate for such Default Interest Period plus the Margin and (ii) in respect of
such other amounts, the Default Margin plus the LIBOR Rate for such Default
Interest Period plus the Margin.

          Section 4. Payments; Pro Rata Treatment; Computations; Etc.

          4.01 Payments.

          (a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this
Agreement and the Promissory Notes (including fees and indemnities) shall be
made in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent for the account of the Lenders at
account number 01-88179-3701-00 (Attn: Loan Settlement, Ref: Cerro Verde)
maintained by the Administrative Agent with CALYON New York Branch
(ABA#026-008-073), not later than 11:00 a.m. New York time on the date on which
such payment shall become

                         Commercial Banks Loan Agreement



                                      -9-


due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day).

          (b) Each payment received by the Administrative Agent under this
Agreement or any Promissory Note for the account of any Lender shall be paid by
the Administrative Agent promptly to such Lender, in immediately available
funds, for the account of such Lender's Applicable Lending Office for the Loan
or other obligation in respect of which such payment is made.

          (c) If the due date of any payment under this Agreement or any
Promissory Note would otherwise fall on a day that is not a Business Day, such
date shall be extended to the next succeeding Business Day, and interest shall
be payable for any principal so extended for the period of such extension;
provided, however, that if such next succeeding Business Day falls in the
following month, such date shall be the Business Day immediately preceding such
date.

          4.02 Pro Rata Treatment. Except to the extent otherwise provided
herein or in the Master Participation Agreement, the Loans shall be disbursed by
the Lenders pro rata in accordance with the maximum respective principal amounts
of each Lender's Commitment. The extent to which payments by the Borrower to any
Senior Facility Lender in respect of the Senior Loan Obligations must be a Pro
Rata Payment shall be determined in accordance with Section 3.04 of the Master
Participation Agreement.

          4.03 Computations. Interest on Loans and commitment fees shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which such
interest and commitment fees are payable.

          4.04 Certain Notices.

          (a) Notices by the Borrower to the Administrative Agent of borrowings,
termination or reduction of Commitments and voluntary prepayments of Loans shall
be irrevocable and shall be effective only if received by the Administrative
Agent not later than 11:00 a.m. New York time on the number of days, as the case
may be, prior to the date of the relevant borrowing, termination or reduction of
Commitments and voluntary prepayments of Loans, as the case may be, specified
below:



Type of Notice                        Required Prior Notice
- --------------                        ---------------------
                                   
Borrowing of Loans;                   15 Business Days for Base Advances
Termination or Reduction of           and 10 New York Business Days for
Commitments under Section 2.10; and   Stand-by Advances
Mandatory Prepayments of Loans

Voluntary Prepayments of Loans        60 days


          (b) If received later than 11:00 a.m. New York time on such date, such
notice shall be effective on the next succeeding Business Day unless the
Borrower is notified by the Administrative Agent that such notice shall be
effective on the original Business Day.

                         Commercial Banks Loan Agreement



                                      -10-


          (c) Each notice of borrowing or voluntary prepayment shall specify (i)
the Tranche A Loans and/or Tranche B Loans to be borrowed or prepaid, (ii) the
aggregate amount (subject to Sections 2.02, 2.08 and 2.09) of each Tranche A
Loan and/or Tranche B Loan to be borrowed and (iii) the date of borrowing or
voluntary prepayment (which shall be a Business Day). Each such notice of
termination or reduction shall specify the amount of the Commitments to be
terminated or reduced. The Administrative Agent shall promptly notify the
Lenders of the contents of each such notice (and in any event by the Business
Day after the Administrative Agent's receipt thereof).

          4.05 Non-Receipt of Funds by the Administrative Agent.

          (a) Without limiting Section 2.07 of the Master Participation
Agreement, unless the Administrative Agent shall have been notified by a Lender
or the Borrower (the "Payor") prior to the date on which the Payor is to make
payment to the Administrative Agent of (in the case of a Lender) the proceeds of
a Loan to be made by such Lender hereunder or (in the case of the Borrower) a
payment to the Administrative Agent for account of one or more of the Lenders
hereunder (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Administrative Agent, the Administrative Agent may
assume that the Required Payment has been made and may, in reliance upon such
assumption (but shall not be required to), make the amount thereof available to
the intended recipient(s) on such date; and, if the Payor has not in fact made
the Required Payment to the Administrative Agent, the recipient(s) of such
payment shall, on demand, repay to the Administrative Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date (the "Advance Date") such amount was so made
available by the Administrative Agent until the date the Administrative Agent
recovers such amount at a rate per annum equal to that indicated by the
Administrative Agent in a notice to such recipient(s) as the Administrative
Agent's cost of funds for such period (determined by the Administrative Agent in
its reasonable discretion, which determination shall be conclusive) and, if such
recipient(s) shall fail promptly to make such payment, the Administrative Agent
shall be entitled to recover such amount, on demand, from the Payor, together
with interest as aforesaid.

          (b) If neither the recipient(s) nor the Payor shall return the
Required Payment to the Administrative Agent within three Business Days of the
Advance Date, then, retroactively to the Advance Date, the Payor and the
recipient(s) shall each be obligated to pay interest on the Required Payment as
follows:

               (i) if the Required Payment shall represent a payment to be made
     by the Borrower, as the case may be, to the Lenders, the Payor(s) and the
     recipient(s) shall each be obligated retroactively to the Advance Date to
     pay interest in respect of the Required Payment at the rate of interest
     provided for pursuant to Section 3.02 (and, in case the recipient(s) shall
     return the Required Payment to the Administrative Agent, without limiting
     the obligation of any such Payor(s) under Section 3.02 to pay interest to
     such recipient(s) in respect of the Required Payment); and

                         Commercial Banks Loan Agreement



                                      -11-


               (ii) if the Required Payment shall represent proceeds of a Loan
     to be made by the Lenders to the Borrower, the Payor and the Borrower shall
     each be obligated retroactively to the Advance Date to pay interest in
     respect of the Required Payment at the rate of interest provided for such
     Required Payment pursuant to Section 3.02 (and, in case the Borrower shall
     return such Required Payment to the Administrative Agent, without limiting
     any claim the Borrower may have against the Payor in respect of the
     Required Payment).

          (c) In the event that the Payor and the recipient(s) both return the
Required Payment to the Administrative Agent together with interest thereon as
required hereby, the Administrative Agent shall promptly pay to the recipient(s)
such Required Payment together with such interest paid by the recipient(s).

          (d) The Administrative Agent shall promptly notify each Lender of any
receipt of notice by the Administrative Agent from the Borrower that the
Borrower does not intend to make the Required Payment to the Administrative
Agent for account of one or more of the Lenders.

          Section 5. Yield Protection, Etc.

          5.01 Additional Costs.

          (a) The Borrower shall pay directly to each Lender from time to time
such amounts as are necessary to compensate such Lender for any increase in
costs attributable to its making or maintaining of any Loans to the Borrower or
its obligation to make any Loans hereunder to the Borrower, or any reduction in
any amount receivable by such Lender hereunder in respect of any of such Loans
or such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), in each case, from those costs and
amounts receivable existing on the date hereof, resulting from any Regulatory
Change that:

          (i) imposes or modifies any reserve, special deposit or similar
     requirements, including any application of the Regulation D requirement,
     relating to any extensions of credit or other assets of, or any deposits
     with or other liabilities of, such Lender (including any of such Loans or
     any deposits referred to in the definition of "LIBOR Rate" in Section
     1.01), or any commitment of such Lender (including the Commitment of such
     Lender hereunder); or

          (ii) imposes or any Lender or the London interbank market any other
     condition affecting this Agreement or Loans made by such Lender.

          (b) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Borrower shall pay directly to each
Lender from time to time on request such amounts as such Lender may determine in
good faith to be necessary to compensate such Lender (or, without duplication,
the bank holding company of which such Lender is a subsidiary) for any increase
in costs that it in good faith determines is attributable to the maintenance by
such Lender (or any Applicable Lending Office or such bank holding company),
pursuant to any law or regulation or any interpretation, directive, guideline or
request (whether or

                         Commercial Banks Loan Agreement



                                      -12-


not having the force of law and whether or not failure to comply therewith would
be unlawful) of or by any court or governmental, monetary, fiscal or other
authority (i) following any Regulatory Change or (ii) implementing any
risk-based capital guideline or other requirement (whether or not having the
force of law and whether or not the failure to comply therewith would be
unlawful) issued after the date of this Agreement by any government or
governmental or supervisory authority implementing at the national level the
Basle Accord, of capital in respect of its Commitment or Loans (such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender (or any Applicable Lending
Office or such bank holding company) to a level below that which such Lender (or
any Applicable Lending Office or such bank holding company) could have achieved
but for such law, regulation, interpretation, directive, guideline or request).
For purposes of this Section 5.01(b), "Basle Accord" shall mean the proposals
for risk-based capital framework described by the Basle Committee on Banking
Regulations and Supervisory Practices in its paper entitled "International
Convergence of Capital Measurement and Capital Standards" dated July 1988, as
amended, modified and supplemented and in effect from time to time or any
replacement thereof.

          (c) Section 5.01 does not apply, and no Lender shall be entitled to
make any claim under Section 5.01, to the extent any Additional Cost is
attributable directly or indirectly to the application of, compliance with or
implementation of any part or "pillar" of the International Convergence of
Capital Measurement Standards: a Revised Framework, published by the Basle
Committee on Banking Supervision in June 2004 (as in effect on the date hereof),
or any implementation or interpretation thereof, whether by any law or
regulation, or otherwise, or to any change by a Lender from one method of
calculating capital adequacy to another, insofar as such Additional Costs are
directly or indirectly attributable to credit-related events or circumstances
that are specific to a Lender and not solely to general regulatory guidelines or
requirements imposed on the commercial banking sector generally.

          (d) Each Lender shall notify the Borrower of any event occurring after
the date of this Agreement entitling such Lender to compensation under clause
(a) or (b) of this Section 5.01 as promptly as practicable, but in any event,
within six months after such Lender obtains actual knowledge thereof; provided,
that if such Lender fails to give such notice within six months after it obtains
actual knowledge of such an event, such Lender shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any Additional
Costs resulting from such event, only be entitled to payment under this Section
5.01 for costs incurred from and after the date six months prior to the date
that such Lender does give such notice. Each Lender shall designate a different
Applicable Lending Office, if possible, for the Loans of such Lender affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Lender, be
disadvantageous to such Lender, except that such Lender shall have no obligation
to designate an Applicable Lending Office located in the United States of
America. Each Lender shall furnish to the Borrower a certificate setting forth
in reasonable detail the basis and amount of each request by such Lender for
compensation under clause (a) or (b) of this Section 5.01. The payment of any
such amount by the Borrower shall not preclude the Borrower from contesting such
calculation.

                         Commercial Banks Loan Agreement



                                      -13-


          (e) In the event that any Lender shall determine at any time that it
is required to maintain reserves in respect of Eurocurrency Liabilities during
any period during which the principal amount of any Loan is outstanding (each
such period, for such Lender, a "LIBOR Reserve Period"), but only in respect of
any period during which any reserve shall actually be maintained by such Lender
for the Loans as a result of a reserve requirement applicable to it under
Regulation D in connection with Eurocurrency Liabilities, then such Lender shall
promptly give notice to the Borrower and the Administrative Agent of such
determination, and the Borrower shall directly pay to such Lender additional
interest on the unpaid principal amount of such Loan during such LIBOR Reserve
Period at a rate per annum which shall, during each monthly period applicable to
such Loan, be the amount by which (i) the LIBOR Rate for such monthly period
divided (and rounded upward, if necessary, to the next whole multiple of 1/100
of 1%) by a percentage equal to 100% minus the then-stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to such Lender in respect of
Eurocurrency Liabilities exceeds (ii) the LIBOR Rate for such monthly period.
Any Lender so requesting compensation shall furnish along with such notice a
certificate setting forth in reasonable detail the cost actually incurred to
maintain such reserves and the basis for the determination of such amount.
Additional interest payable pursuant to the immediately preceding sentence shall
be paid by the Borrower at the time that it is otherwise required to pay
interest in respect of such Loan or, if later demanded by any Lender, promptly
on the next Payment Date for any principal of the Loans after such demand. Each
Lender agrees that, if it gives notice to the Borrower and the Administrative
Agent of the existence of a LIBOR Reserve Period, it shall promptly notify the
Borrower and the Administrative Agent of any termination thereof, at which time
the Borrower shall cease to be obligated to pay additional interest to such
Lender pursuant to the first sentence of this paragraph until such time, if any,
as a subsequent LIBOR Reserve Period shall occur.

          (f) Any determination or allocation made by any Lender pursuant to
this Section 5.01 shall be made by such Lender in good faith and, absent error,
will be conclusive, so long as such determination is applied to the Borrower in
a non-discriminatory manner as compared to similarly situated borrowers.

          5.02 Alternate Interest Rate. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBOR Rate for any
Interest Period or Default Interest Period:

          (a) the Administrative Agent determines, which determination shall be
     conclusive absent manifest error, that quotations of interest rates for the
     relevant deposits referred to in the definition of "LIBOR Rate" in Section
     1.01 hereof are not being provided in the relevant amounts or for the
     relevant maturities for purposes of determining rates of interest as
     provided herein; or

          (b) the Majority Bank Lenders notify the Administrative Agent that (i)
     the relevant rates of interest referred to in the definition of "LIBOR
     Rate" in Section 1.01 hereof upon which the rate of interest for such
     Interest Period or Default Interest Period is to be determined will not
     adequately reflect the cost to such Lenders of making or maintaining Loans,
     or maintaining any other amount hereunder not paid when due, for

                         Commercial Banks Loan Agreement



                                      -14-


     such Interest Period or Default Interest Period or (ii) deposits in Dollars
     in the London interbank market are not available to Lenders in the ordinary
     course of business in sufficient amounts to make and/or maintain their
     Loans,

then the Administrative Agent shall notify the Borrower thereof and the
following provisions shall apply:

          (A) During the thirty-day period following the date of any such notice
     (the "Negotiation Period"), the Administrative Agent (on behalf of the
     Lenders) and the Borrower will negotiate in good faith for the purpose of
     agreeing upon an alternative, mutually acceptable basis (the "Substitute
     Basis") for determining the rate of interest to be applicable to Loans, and
     any other amounts hereunder not paid when due, from time to time and if, at
     the expiry of the Negotiation Period, the Administrative Agent (on behalf
     of the Lenders) and the Borrower have agreed upon a Substitute Basis and
     any required governmental approvals therefor have been obtained, the
     Substitute Basis shall take effect from such date (including such
     retroactive date) as the Administrative Agent (on behalf of the Lenders)
     and the Borrower may in such circumstance agree.

          (B) If at the expiry of the Negotiation Period, a Substitute Basis
     shall not have been agreed upon or any required governmental approvals
     therefor shall not have been obtained, the Administrative Agent (with the
     consent of the Majority Bank Lenders) shall notify the Borrower of the cost
     to the Lenders (as reasonably determined by them) of funding and
     maintaining the outstanding affected Loans, and any other amounts hereunder
     not paid when due for such Interest Period or Default Interest Period and
     the interest payable to the Lenders on Loans and such other amounts not
     paid when due to which such Interest Period or Default Interest Period
     applies shall be interest at a rate per annum equal to the cost of funding
     and maintaining such Loans or such other amounts as so notified by the
     Administrative Agent plus the applicable Margin plus, during any Interest
     Period or any Default Interest Period, upon the occurrence and during the
     Continuance of any MPA Event of Default under Section 9.01 of the Master
     Participation Agreement (other than any Event of Default under Section
     9.01(a) thereof relating to this Agreement), the Default Margin.

The procedures specified in (A) and (B) above shall apply to each relevant
period succeeding the first such period to which they were applied unless and
until the Administrative Agent notifies the Borrower that the condition referred
to in clause (a) of this Section 5.02 no longer exists or the Administrative
Agent (at the request of the Majority Bank Lenders) notifies the Borrower that
the condition referred to in clause (b) of this Section 5.02 no longer exists
(which notice the Lenders agree to give or cause to be given promptly following
the cessation of such condition), whereupon interest on Loans shall again be
determined in accordance with the provisions of Section 3.02, effective
commencing on the third Business Day after the date of such notice.

          5.03 Compensation. Upon request of the Administrative Agent on behalf
of any Lender, the Borrower shall pay to the Administrative Agent for the
account of such Lender such amount or amounts as shall be sufficient to
indemnify it for any Funding Losses in accordance with Section 3.11 of the
Master Participation Agreement.

                         Commercial Banks Loan Agreement



                                      -15-


          5.04 Mitigation. If an event or circumstance occurs that would entitle
a Lender to exercise any of the rights or benefits afforded by this Section 5,
such Lender, promptly upon becoming aware of the same, shall take all steps as
may be reasonably available to eliminate or mitigate the effects of such event
or circumstance; provided, however, that such Lender shall not be under any
obligation to take any step that, in its sole discretion, would (a) result in
its incurring additional material costs or taxes or (b) otherwise be
disadvantageous to such Lender; provided, further, that the Borrower shall
reimburse any such Lender for all reasonable and documented costs and taxes
incurred pursuant to this Section 5.04.

          5.05 Applicable Lending Offices. A Lender may change its Applicable
Lending Office for any Loan by written notice to the Administrative Agent, the
Trustee and the Borrower and such notice shall be effective for purposes of this
Agreement as of the date specified therein.

          Section 6. Conditions Precedent.

          6.01 Initial Loans. The obligation of each Lender to make its initial
Loan hereunder is subject to Section 3.10 of the Master Participation Agreement
and the satisfaction (or waiver by each Lender) of any conditions set forth in
Section 5.01 of the Master Participation Agreement.

          6.02 Additional Conditions. The obligation of each Lender to make any
Loan hereunder (excluding its initial Tranche A Loan which is subject to
conditions described in Section 6.01 above) is subject to the satisfaction (or
waiver by it) of the following conditions:

          (a) Satisfaction of Common Conditions Precedent. The common conditions
     precedent set forth in Section 5.02 of the Master Participation Agreement
     shall have been satisfied (or waived as provided therein); and

          (b) Suspension. The obligation of any Senior Facility Lender shall not
     have been deemed to be suspended pursuant to Section 3.10 of the Master
     Participation Agreement.

          Section 7. Representations and Warranties. The Borrower has given
certain representations and warranties for the benefit of the Lenders in Article
VI of the Master Participation Agreement. The rights of the Lenders in respect
of such representations and warranties are set forth in the Master Participation
Agreement and the Master Security Agreement.

          Section 8. Covenants. The Borrower has given covenants and agreements
set forth in Article VII of the Master Participation Agreement. The rights of
the Lenders in respect of such covenants and agreement are set forth in the
Master Participation Agreement and the Master Security Agreement.

          Section 9. Events of Default; Remedies.

          9.01 Events of Default. Subject to Section 9.02, each of the MPA
Events of Default set forth in Section 9.01 of the Master Participation
Agreement is hereby incorporated by

                         Commercial Banks Loan Agreement



                                      -16-


reference in this Agreement as if fully set forth herein, in accordance with
their terms, unless waived in accordance with the Master Participation
Agreement.

          9.02 Remedies. Upon the occurrence and Continuance of an MPA Event of
Default as provided in Section 9.01 hereof, the Lenders shall have each of the
rights and remedies provided in the Master Participation Agreement and the
Master Security Agreement exercisable only pursuant to and in accordance with
the terms thereof.

          Section 10. The Administrative Agent.

          10.01 Appointment, Powers and Immunities.

          (a) Each Lender hereby irrevocably appoints and authorizes the
Administrative Agent to act as its agent hereunder, with such rights,
authorities, discretions and powers as are specifically delegated to the
Administrative Agent by the terms of this Agreement, together with such other
powers as are reasonably incidental thereto, and each Lender authorizes and
instructs the Administrative Agent to execute and deliver each of the Master
Participation Agreement, the Completion Guarantee, the Transfer Restrictions
Agreement and any other Financing Document to which such Lender and/or the
Administrative Agent is a party and each such Lender agrees to be bound by the
terms and conditions of each such agreement as if it had executed and delivered
such agreement for and in its own name.

          (b) Each Lender hereby agrees and acknowledges that the Administrative
Agent shall act for and on behalf of the Lenders hereunder for purposes of each
of the Master Participation Agreement, the Completion Guarantee and the Transfer
Restrictions Agreement, and each Lender hereby authorizes such action by the
Administrative Agent on its behalf in accordance with its appointment hereunder.
Notwithstanding the foregoing, the Administrative Agent shall promptly upon
request of any Lender deliver any request, notice or communication permitted to
be given by any Senior Facility Lender under or pursuant to the Master
Participation Agreement, the Completion Guarantee and the Transfer Restrictions
Agreement.

          (c) The Administrative Agent (which term as used in this sentence and
in Section 10.05 shall include reference to its Affiliates and its Affiliates'
officers, directors, employees and agents) shall not: (i) have any duties or
responsibilities except those expressly set forth in this Agreement, or by
reason of this Agreement be a trustee for any Lender, (ii) be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement, or in any certificate or other document referred to or provided
for in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any Promissory Note or any other document referred to or provided for
herein or for any failure by the Borrower or any other Person to perform any of
its obligations hereunder or thereunder, (iii) be required to initiate or
conduct any litigation or collection proceedings hereunder or (iv) be
responsible for any action taken or omitted to be taken by it hereunder or under
any other document or instrument referred to or provided for herein or in
connection herewith, except for its own gross negligence or willful misconduct.

                         Commercial Banks Loan Agreement



                                      -17-


          (d) The Administrative Agent may employ agents and attorneys-in-fact,
and the Administrative Agent shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good faith.
The Administrative Agent may deem and treat the payee of any Promissory Note as
the holder thereof for all purposes hereof unless and until a notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent.

          (e) Any bank serving as Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or Affiliate thereof as if it were not
the Administrative Agent hereunder.

          10.02 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely upon, and shall not incur any liability for relying upon,
any certification, notice, request, consent, statement, instrument, document or
other communication (including any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement, the Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance with
instructions given by the Majority Bank Lenders, and such instructions of the
Majority Bank Lenders and any action taken or failure to act pursuant thereto
shall be binding on all of the Lenders. The Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (a) any statement,
warranty or representation made in or in connection with this Agreement, any
other Financing Document or the Sulfide Project, (b) the contents of any
certificate, report or other document delivered hereunder or in connection
herewith, (c) the performance or observance of any of the covenants, agreements
or other terms or conditions set forth herein, (d) the validity, enforceability,
effectiveness or genuineness of this Agreement or any other agreement,
instrument or document, or (e) the satisfaction of any condition set forth in
Section 6 or elsewhere herein, other than to confirm receipt of items required
to be delivered to the Administrative Agent.

          10.03 Defaults. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of an MPA Default (other than the
non-payment of principal of or interest on Loans or of commitment fees) unless
the Administrative Agent has received notice from a Lender or the Borrower
specifying such MPA Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of any MPA Default, the Administrative Agent shall give prompt
notice thereof to the Lenders and the Borrower (and shall give each Lender
prompt notice of each such non-payment).

          10.04 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed under Section 12.21 of the
Master Participation Agreement, but without limiting the obligations of the
Borrower under said Section 12.21 of the Master Participation Agreement) ratably
in accordance with the aggregate principal amount of the Loans

                         Commercial Banks Loan Agreement



                                      -18-


held by the Lenders (or, if no Loans are at the time outstanding, ratably in
accordance with their respective Commitments), for any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments,
settlements, suits, costs, expenses or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against (including by
any Lender) the Administrative Agent arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other documents contemplated by or referred to herein or the transactions
contemplated hereby (including, without limitation, the costs and expenses that
the Borrower is obligated to pay under Section 12.21 of the Master Participation
Agreement but excluding, unless an MPA Event of Default has occurred and is
continuing, normal administrative costs and expenses incident to the performance
of the Administrative Agent's agency duties hereunder) or the enforcement of any
of the terms hereof or of any such other documents; provided, however, that no
Lender shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Administrative Agent.

          10.05 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Borrower and its respective Affiliates and its own decision to enter into this
Agreement and that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement. The
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower of this Agreement or any other
document referred to or provided for herein or to inspect the properties or
books of the Borrower. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the
Administrative Agent hereunder (as to which the Administrative Agent only shall
have the duty to forward what it has received), the Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower or any of its respective Affiliates that may come into its possession.

          10.06 Failure to Act. Except for action expressly required of the
Administrative Agent hereunder, the Administrative Agent shall in all cases be
fully justified in failing or refusing to act hereunder unless it shall receive
further assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.04 against any and all liability and expense that
may be incurred by the Administrative Agent by reason of taking or continuing to
take any such action.

          10.07 Resignation or Removal of Administrative Agent. The
Administrative Agent, subject to the appointment of a successor as provided in
this Section 10.07, may resign at any time by notifying the Lenders and the
Borrower. The Administrative Agent may be removed as agent hereunder upon 30
days' notice by an instrument in writing signed by the Majority Bank Lenders and
the Borrower. Upon any such resignation or removal, the Majority Bank Lenders
shall have the right, with the approval of the Borrower not to be unreasonably
withheld, to appoint a successor Administrative Agent. No removal or resignation
of a Administrative Agent

                         Commercial Banks Loan Agreement



                                      -19-


or appointment of a successor Administrative Agent shall be effective until (a)
the appointment of a successor is accepted and (b) solely in the case of a
removal all indemnity and compensation required under the Financing Documents
have been paid or provided for. If no successor shall have been so appointed by
Majority Bank Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent with the approval of the Borrower not to be
unreasonably withheld which shall be a bank with an office in New York, New York
or London, or an affiliate of any such bank. Upon the acceptance of its
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. The fees payable by the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such successor.
After a Administrative Agent's resignation hereunder, the provisions of this
Section 10 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Administrative
Agent.

          10.08 Voting. Except as otherwise specified in the Master
Participation Agreement, in each instance that the Lenders are required to vote
hereunder, a vote shall be taken among the Lenders within the period of time
specified by the Administrative Agent.

          10.09 Administrative Agent Notices. The Administrative Agent agrees to
promptly furnish to each Lender a copy of each written communication (including
financial information and project reports) received by it from the Parent
Companies, the Borrower or the Trustee expressly relating to, and any amendment
or waiver of any of the provisions of, this Agreement, the Master Participation
Agreement, the Transfer Restrictions Agreement, the Security Documents, the
other Financing Documents, the Project Documents and the transactions
contemplated hereby and thereby, or from any Senior Lender pursuant to Section
10.02 of the Master Participation Agreement. In addition, the Administrative
Agent agrees to promptly advise each Lender of any material action taken, or any
action proposed by the Lenders to be taken that is not taken, by the Senior
Lenders at any meeting of Senior Lenders.

          Section 11. Miscellaneous.

          11.01 Waiver. Except as expressly provided herein, no failure on the
part of the Administrative Agent or any Lender to exercise and no delay in
exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement or any Promissory Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or any Promissory Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.

                         Commercial Banks Loan Agreement



                                      -20-


          11.02 Notices.

          (a) Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be (i) in writing (including
telecopier) and (ii) telecopied or sent by overnight courier (if for inland
delivery) or international courier (if for overseas delivery) to a party hereto
at its address and contact number specified in the signature pages hereto, or at
such other address and contact number as is designated by such party in a
written notice to the other parties hereto.

          (b) All such notices and communications shall be effective (i) if sent
by telecopier, when sent (on receipt of written or oral confirmation of receipt)
and (ii) if sent by courier, (A) one day after deposit with an overnight courier
if for inland delivery and (B) three days after deposit with an international
courier if for overseas delivery. Notice of any address or facsimile number
change shall be effective only upon receipt.

          (c) The Borrower agrees that the Administrative Agent may make any
notices and communications received hereunder (the "Communications") available
to the Lenders in an electronic/soft medium by posting the Communications on
Intralinks or a substantially similar electronic transmission system (the
"Platform"). THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE". THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY
FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS,
IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT
PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL
THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES
(COLLECTIVELY, THE "AGENT PARTIES") HAVE ANY LIABILITY TO ANY CREDIT PARTY, ANY
LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING, WITHOUT
LIMITATION, DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF SUCH
CREDIT PARTY'S OR THE ADMINISTRATIVE AGENT'S TRANSMISSION OF COMMUNICATIONS
THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS
FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO
HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

          (d) Each Lender agrees that notice to it (as provided in the next
sentence) specifying that the Communications have been posted to the Platform
shall constitute effective delivery of the Communications to such Lender for
purposes of the Financing Documents. Each Lender agrees (i) to provide to the
Administrative Agent in writing (including by electronic

                         Commercial Banks Loan Agreement



                                      -21-


communication), promptly after the date of this Agreement, an e-mail address to
which the foregoing notice may be sent by electronic transmission and (ii) that
the foregoing notice may be sent to such e-mail address.

          (e) Nothing herein shall prejudice the right of the Administrative
Agent or any Lender to give any notice or other communication pursuant to any
Financing Document in any other manner specified in such Financing Document.

          11.03 Amendments, Etc.

          (a) Neither this Agreement nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
(i) Borrower, (ii) the Administrative Agent, acting in accordance with clause
(b) of this Section 11.03 and Section 10.01 of the Master Participation
Agreement and (iii) with respect to any amendment, supplement or modification
that modifies any provision of this Agreement in a manner that adversely affects
any rights of the Administrative Agent hereunder or enlarges its duties
hereunder, the Administrative Agent.

          (b) No amendment, modification, supplement or waiver of any provision
of this Agreement shall, unless by an instrument signed or consented to by all
of the Lenders: (i) increase, or extend the term of the Tranche A Commitments or
Tranche B Commitments, or extend the term or waive any requirement for the
reduction or termination of the Tranche A Commitments or Tranche B Commitments,
(ii) extend the date fixed for the payment of principal of or interest on any
Loan or any commitment or other fee hereunder or under the Promissory Notes,
(iii) reduce the amount of any such payment of principal, (iv) reduce the rate
at which interest is payable thereon or any commitment or other fee is payable
hereunder, or alter the basis for calculating any other obligations, (v) alter
the rights or obligations of the Borrower under Section 2.08, 2.09, 2.10 or
2.11, (vi) alter the terms of this Section 11.03 or Section 4.02, (vii) modify
the definition of the term "Majority Bank Lenders" or modify in any other manner
the number or percentage of the Lenders required to make any determinations or
waive any rights hereunder or to modify any provision hereof or (viii) waive any
of the conditions precedent set forth in Section 6.

          (c) No waiver by any party hereto of any of its rights, powers and
privileges under this Agreement shall be effective other than pursuant to a
written instrument executed by the Party waiving such right, power or privilege,
except that a waiver of rights, powers and privileges by the Senior Facility
Lenders can be executed by the Administrative Agent acting in accordance with
Section 10.01 of the Master Participation Agreement.

          (d) Any modification, supplement or waiver shall be for such period
and shall be subject to such conditions as shall be specified in the instrument
effecting the same and any such waiver shall be effective only in the specific
instance and for the purpose for which given.

          11.04 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

                         Commercial Banks Loan Agreement



                                      -22-


          11.05 Assignments and Participations.

          (a) The Borrower may not assign any of its rights or obligations
hereunder or under the Promissory Notes without the prior written consent of all
of the Lenders and the Administrative Agent (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void).

          (b) Each of the Lenders may assign any and all of its rights and
obligations hereunder only pursuant to Section 12.13 of the Master Participation
Agreement. Upon execution and delivery by the assignee to the Borrower and the
Administrative Agent and the Administrative Agent of an assignment and
acceptance agreement substantially in the form of Exhibit C hereto (such
agreement, an "Assignment and Acceptance"), pursuant to which such assignee
agrees to become a "Lender" hereunder (if not already a Lender) having the
Commitment and Loans specified in such instrument, the assignee shall have, to
the extent of such assignment, the rights, obligations and benefits of a Lender
hereunder holding the Commitment and Loans (or portion(s) thereof) assigned to
it (in addition to the Commitment and Loans, if any, theretofore held by such
assignee) and the assigning Lender shall, to the extent of such assignment, be
released from the Commitment and Loans (or portion(s) thereof) so assigned (and,
in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to, for periods during which
it held the Loans, the benefits of Sections 5.01 and 11.06 hereof and Sections
3.09 and 12.21 of the Master Participation Agreement).

          (c) Each Lender may sell or agree to sell to one or more commercial
banks or lending institutions (a "Participant") a participation in all or any
part of its Loans, its Promissory Notes or in its Commitments; provided that no
Participant shall have any rights or benefits under this Agreement, any
Promissory Note or any other Financing Documents. All amounts payable by the
Borrower to any Lender under Section 5 in respect of Loans held by it, and its
Commitment, shall be determined as if such Lender had not sold or agreed to sell
any participations in such Loans and Commitment, and as if such Lender were
funding each of such Loan and Commitment in the same way that it is funding the
portion of such Loan and Commitment in which no participations have been sold.

          (d) A Lender or the Administrative Agent, as the case may be, may
furnish any information concerning the Borrower in the possession of such Lender
or the Administrative Agent from time to time to assignees and Participants
(including prospective assignees and Participants) subject to the
confidentiality provisions set forth in Section 12.10 of the Master
Participation Agreement.

          11.06 Survival/Reinstatement. The obligations of the Borrower under
Section 5 and the obligations of the Lenders under Section 10.04 shall survive
the repayment of the Loans and the termination of the Commitments. This
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Borrower's obligations hereunder,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by the Administrative Agent or
any Lender. In the event that any payment or any part thereof is so rescinded,
reduced, restored or returned,

                         Commercial Banks Loan Agreement



                                      -23-


such obligations shall be reinstated and deemed reduced only by such amount paid
and not so rescinded, restored or returned.

          11.07 No Immunity. To the extent that any party hereto has or
hereafter may acquire any immunity from jurisdiction of any court or from any
process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, execution, sovereign immunity or otherwise) with
respect to itself or its property, it irrevocably waives such immunity, to the
fullest extent permitted by law, in respect of its obligations under this
Agreement and the Promissory Notes.

          11.08 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.

          11.09 GOVERNING LAW AND SUBMISSION TO JURISDICTION. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE PROVISIONS OF SECTION 12.16 OF THE MASTER PARTICIPATION AGREEMENT
SHALL BE DEEMED INCORPORATED HEREIN MUTATIS MUTANDIS. THE BORROWER CONFIRMS ITS
APPOINTMENT OF CT CORPORATION AS AGENT FOR SERVICE OF PROCESS, PURSUANT TO
SECTION 12.16(B) OF THE MASTER PARTICIPATION AGREEMENT.

          11.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDERS
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED
HEREBY WHETHER BASED ON CONTRACT, TORT OR OTHER THEORY.

          11.11 Judgment Currency. This is an international loan transaction in
which the specification of Dollars and payment in New York, New York, United
States of America is of the essence, and Dollars shall be the currency of
account in all events. The provisions of Section 12.06 of the Master
Participation Agreement shall be deemed incorporated herein in its entirety.

          11.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          11.13 English Language. This Agreement is made in the English
language. Any translation of this Agreement shall have no legal validity.

                         Commercial Banks Loan Agreement



                                      -24-


            [The remainder of this page is intentionally left blank.]

                         Commercial Banks Loan Agreement



                                       S-1


          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.

                               The Borrower

                               SOCIEDAD MINERA CERRO VERDE S.A.A.


                               By: /s/ Cristian Moran
                                   ---------------------------------------------
                               Name: Cristian Moran
                               Title: Attorney in Fact

                               Address for: Sociedad Minera Cerro
                               Notices      Verde S.A.A.
                                            c/o Asiento Minero Cerro Verde
                                            Uchumayo (Arequipa/Peru),
                                            Casilla Postal #299
                                            Shipping: Av. Alfonso Ugarte #304
                                            Cercado, Arequipa, Republic of Peru
                               Attention: General Manager
                               Fax No.: (054) 283-376
                               Telephone No.: (054) 283-363

                               With a copy to: PDC, at
                                               Phelps Dodge Tower
                                               1 North Central Avenue
                                               Phoenix, Arizona 85004
                                               U.S.A
                               Attention: Treasurer
                               Fax No: (602) 366-8150
                               Telephone No: (602) 366-8100

                         Commercial Banks Loan Agreement



                                       S-2


                                The Administrative Agent

                                CALYON NEW YORK BRANCH,
                                     as Administrative Agent


                                By: /s/ Ted Vandermel
                                    --------------------------------------------
                                Name: Ted Vandermel
                                Title: Director


                                By: /s/ Samuel Sherman
                                    --------------------------------------------
                                Name: Samuel Sherman
                                Title: Director

                                Address for notices: CALYON New York Branch
                                                     1301 Avenue of the Americas
                                                     New York, New York 10019

                                Attention: Ted Vandermel
                                Fax No.: 212.261.3421
                                Telephone No.: 212.261.7888

                         Commercial Banks Loan Agreement



                                       S-3


                                The Lenders

Commitment

Tranche A: US$22,500,000        CALYON NEW YORK BRANCH,
Tranche B: US$22,500,000           as Lender


                                By: /s/ Georges Romano
                                    --------------------------------------------
                                Name: Georges Romano
                                Title: Managing Director


                                By: /s/ Samuel Sherman
                                    --------------------------------------------
                                Name: Samuel Sherman
                                Title: Director

                                Lending Office: New York Branch

                                Address for notices: CALYON New York Branch
                                                     1301 Avenue of the Americas
                                                     New York, New York 10019

                                Attention: Ted Vandermel
                                Fax No.: 212.261.3421
                                Telephone No.: 212.261.7888

                         Commercial Banks Loan Agreement



                                       S-4


Commitment

Tranche A: US$22,500,000        MIZUHO CORPORATE BANK, LTD.,
Tranche B: US$22,500,000           as Lender


                                By: /s/ Masatoshi Abe
                                    --------------------------------------------
                                Name: Masatoshi Abe
                                Title: Senior Vice President

                                Lending Office: New York Branch

                                Address for Notices: 1251 Avenue of the Americas
                                                     New York, New York 10020

                                Attention: Paul Nicholas
                                Fax No.: 212.282.3618
                                Telephone No.: 212.282.4864

                         Commercial Banks Loan Agreement



                                       S-5


Commitment

Tranche A: US$22,500,000          THE BANK OF NOVA SCOTIA,
Tranche B: US$22,500,000             as Lender


                                  By: /s/ Michael K. Eddy
                                      ------------------------------------------
                                  Name: Michael K. Eddy
                                  Title: Director-Mining


                                  By: /s/ Alexander Mihailovich
                                      ------------------------------------------
                                  Name: Alexander Mihailovich
                                  Title: Associate

                                  Lending Office: Toronto

                                  Address for Notices: Scotia Capital
                                                       40 King Street West,
                                                       62nd Floor P.O. Box 4085,
                                                       Station A Corporate
                                                       Banking - Mining Toronto,
                                                       Ontario, Canada M5W 2X6

                                  Attention: Michael K. Eddy
                                             Alexander Mihailovich
                                  Fax No.: 416.866.2009
                                  Telephone No.: 416.866.7186/0006

                         Commercial Banks Loan Agreement



                                       S-6


Commitment

Tranche A: US$22,500,000     THE ROYAL BANK OF SCOTLAND PLC,
Tranche B: US$22,500,000        as Lender


                             By: /s/ Gregor Hamilton
                                 -----------------------------------------------
                             Name: Gregor Hamilton
                             Title: Associate Director

                             Lending Office: The Royal Bank of Scotland plc
                                             Structured Finance, Level 5
                                             135 Bishopsgate London EC2M 3UR
                                             United Kingdom

                             Address for notices: The Royal Bank of Scotland
                                                  plc Structured Finance,
                                                  Level 5 135 Bishopsgate London
                                                  EC2M 3UR United Kingdom

                             Attention: Graham Boreham
                             Fax No.: ++44 20 7375 8762
                             Telephone No.: ++44 20 7648 3978

                         Commercial Banks Loan Agreement



                                                                      Appendix 1
                                                               to Loan Agreement

                           FORM OF NOTICE OF BORROWING

                                        [Date](1)

TO: [____________________] (the "Administrative Agent")

FROM: Sociedad Minera Cerro Verde S.A.A. (the "Borrower")

RE: Notice of Borrowing pursuant to Section 2.02 of the Commercial Banks Loan
    Agreement dated as of September 30, 2005 between the Borrower, CALYON New
    York Branch, as Administrative Agent and the Lenders party thereto (the
    "Loan Agreement")

          The Borrower hereby requests disbursement under the Loan Agreement to
the Onshore Dollars Account under the Master Security Agreement on ________,
20__ (the "Disbursement Date") in an aggregate amount equal to [US$ ___________
as a Tranche A Loan] and/or [US$ ________ as a Tranche B Loan].(2)

          Disburse to: [name of bank in New York, account number]

          The Borrower hereby represents and warrants to the Lenders and the
Administrative Agent as of the date hereof that:

          1. The requested disbursement date is a Business Day falling on or
     before the [Tranche A Commitment Termination Date] and/or [the Tranche B
     Commitment Termination Date].(3)

          2. The requested disbursement is pro rata with disbursements requested
     under the Senior Loan Documents and is calculated in accordance with
     Section [_______] of the Master Participation Agreement.

          3. The disbursements requested hereby have been or are scheduled to be
     utilized in accordance with Section 7.04 of the Master Participation
     Agreement.

          4. The disbursements of Senior Loans made to date (if any) have been
     or are being utilized for purposes of the Sulfide Project in accordance
     with Section 7.04 of the Master Participation Agreement.

- ----------
(1)  [To be dated no later than 15 Business Days before the date for the Loan to
     which this Notice of Borrowing relates.]

(2)  [To be inserted as applicable.]

(3)  [To be inserted as applicable.]

                  Appendix 1 to Commercial Banks Loan Agreement



                                       -2-


          5. No MPA Default or MPA Event of Default has occurred and is
     Continuing.

          6. The conditions contained in [Section 5.01 [initial disbursement
     only] and] Section 5.02 of the Master Participation Agreement (4) and
     [Section 6.01 [initial disbursement only] and] Section 6.02 of the
     Commercial Banks Loan Agreement have been satisfied (or are expected to be
     satisfied on the date of disbursement, as applicable).

          The Borrower agrees that, if prior to its receipt of the disbursement
requested hereby it determines that any matter certified by it herein will not
be true and correct as of the time of such disbursement, it will promptly so
notify the Administrative Agent. Except to the extent set forth in any such
notice, each matter certified by the Borrower herein shall be deemed once again
to be certified as true and correct as of the time of such disbursement as if
then made.

          All defined terms used herein and not defined herein have the meanings
assigned to them in the Loan Agreement.

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

- ----------
(4)  [To be inserted solely in connection with the initial disbursement of
     Loans.]

                  Appendix 1 to Commercial Banks Loan Agreement



                                                                       Exhibit A
                                                               to Loan Agreement

                       [FORM OF PROMISSORY NOTE (PAGARE)]

                              PAGARE NO NEGOCIABLE

Place and date of issuance: Lima Peru, ____________
Amount US$ ____________

FOR VALUE RECEIVED, the undersigned, Sociedad Minera Cerro Verde, S.A.A. (the
"Borrower"), a sociedad anonima abierta listed on the Lima Stock Exchange and
duly incorporated under the laws of the Republic of Peru, registered with the
Public Registry of Companies of Lima, under File No. ____________, and whose
principal office is at ____________, Republic of Peru, by this non negotiable
(no negociable) promissory note ("pagare") (the "Promissory Note"), except as
permitted in Section 12.13 (b) of the MPA, unconditionally promises to pay to
the order of ____________ (the "Holder"), against presentment of this note, the
sum of ____________ dollars of the United States of America (US$ ____________)
(the "Principal Amount"), payable on the dates set forth in the following
payment schedule (each date, a "Payment Date") and in the amounts indicated next
to the applicable Payment Date, provided that the principal amount to be paid to
the Holder on a Payment Date shall not exceed the principal amount hereof
outstanding immediately prior to such Payment Date.



                       PRINCIPAL AMOUNT TO BE
    PAYMENT DATE               REPAID
    ------------       ----------------------
                    
First Payment Date          ____________

6th month after the         ____________
First Payment Date

12th month after the        ____________
First Payment Date

18th month after the        ____________
First Payment Date

24th month after the        ____________
First Payment Date

30th month after the        ____________
First Payment Date

36th month after the        ____________
First Payment Date

42nd month after the        ____________
First Payment Date

48th month after the        ____________
First Payment Date

54th month after the        ____________
First Payment Date

60th month after the        ____________
First Payment Date

66th month after the        ____________
First Payment Date

72nd month after the        ____________
First Payment Date

78th month after the        ____________
First Payment Date

84th month after the        ____________
First Payment Date

90th month after the        ____________
First Payment Date


                  Exhibit A to Commercial Banks Loan Agreement



                                       -2-


          The Borrower also promises to pay to the Holder interest on the
outstanding and unpaid principal amount of this Promissory Note, from the date
hereof until the last Payment Date, at an annual rate of the Base Rate plus the
Applicable Margin (the "Interest Rate"), such interest to accrue semiannually on
the outstanding principal amount during the Interest Period. Interest shall be
payable in arrears on each Interest Payment Date. All computations of interest
shall be made on the basis of a year of 360 days and actual days elapsed
(including the first day but excluding the last day) occurring in the period for
which such interest are payable.

          If any payment to be made hereunder is due on a day which is not a
Business Day, such payment shall be made on the immediately succeeding Business
Day.

          If the principal amount of this Promissory Note is not paid in full
when due, then, without prejudice to any other rights or remedies of the Holder,
such principal amount remaining unpaid shall carry default interest for such
period of time within each related Default Interest Period during which such
amount shall remain due and unpaid at an annual rate equal to the Principal
Default Rate. If any other amount payable hereunder is not paid in full when
due, then, without prejudice to any other rights or remedies of the Holder, such
amount remaining unpaid shall carry default interest for such period of time
within each related Default Interest Period during which such amount shall
remain due and unpaid at an annual rate equal to the Other Amounts Default Rate.

          The Borrower may prepay on any Payment Date upon at least 60 days'
prior notice, all or part of the outstanding principal amount hereof, so long
as, in connection with a voluntary partial prepayment, the aggregate amount of
any such voluntary partial prepayment equals at least ____________(1) dollars of
the United States of America (US$____________).

          Borrower shall reimburse to the Holder its funding losses or expenses
(if any) related to such prepayment, if Borrower elects to voluntarily prepay
all or part of the outstanding principal amount hereof on a date other that an
Interest Payment Date or a Payment Date, as the case may be. No premium or
penalty shall be payable in connection with other prepayments.

          Each prepayment of the outstanding principal amount hereof shall
(unless such prepayment repays in full such outstanding principal amount) be
applied to prepay ratably each outstanding installment of principal hereof
remaining to be paid as of the date of such prepayment.

          For purposes of this Promissory Note, the following terms shall have
the following meanings:

          "Administrative Agent" means CALYON New York Branch in its capacity of
administrative agent for the Holder according to the MPA.

- ----------
(1)  Insert pro rata amount of the minimum prepayment amount applicable to the
     Advance(s) evidenced by the Promissory Note.

                  Exhibit A to Commercial Banks Loan Agreement



                                       -3-


          "Applicable Margin" means [1.20% per annum](2).

          "Base Rate" means, with respect to any Interest Period or Default
Interest Period, the interest rate per annum for deposits in dollars of the
United States of America, if any, for a period equal to the relevant interest
period which appears on page 3750 on the Moneyline Telerate Inc. (or such other
page or pages as shall replace that page or pages for the purpose of displaying
offered rates of leading banks for London interbank deposits in dollars) at or
about 11:00 a.m. London time on the second Eurodollar Business Day before and
for value on the first day of the Interest Period or Default Interest Period. If
such rate does not appear on page 3750 on the Moneyline Telerate Inc. or such
other page as shall replace that page for the purpose of displaying offered
rates of leading banks for London interbank deposits in Dollars, the Base Rate
shall be the interest per annum equal to the average (rounded upward to the
nearest fifth decimal place, if such average is not such a decimal) of the
interest rates per annum (as provided to the Administrative Agent) at which
deposits in dollars of the United States are offered by the principal office of
each of the Reference Banks in London, England to prime banks in the London
interbank market at or about 11:00 a.m. (London time) (or as soon thereafter as
practicable) two Eurodollar Business Days before the first day of the Interest
Period or Default Interest Period in an amount substantially equal to each such
Reference Bank's Loan comprising part of such borrowing to be outstanding during
such interest period and for a period equal to (or if there is no equal, then
most comparable) such interest period. The Base Rate for any interest period
shall be determined by the Administrative Agent on the basis of applicable rates
furnished to and received by such agent from the Reference Banks two Business
Days before the first day of such interest period. If any of the Reference Banks
shall be unable or otherwise fails to provide a rate for the purposes of
determining the Base Rate as hereinabove provided, then the Base Rate shall be
determined on the basis of the rate or rates quoted by the remaining Reference
Banks.

          "Business Day" means a day on which banks are generally open for
business in New York, New York, United States, Tokyo, Japan, Frankfurt am Main,
Germany, London, England and Lima, Peru.

          "Collateral Agent" means Citibank del Peru S.A. in its capacity of
onshore collateral agent for the Holder according to the MSA.

          "Commercial Production Start-up Date" means the date as of which the
Borrower, in its judgment, has achieved start of commercial production as
notified by the Borrower to the Administrative Agent.

          "Concentrate" means the copper concentrate to be produced by Borrower
pursuant to the Sulfide Project.

          "Default Interest Period" means each successive period (not in excess
of six months) as the Administrative Agent shall choose (with the consent of the
Majority Bank

- ----------
(2)  On the closing date include the first applicable margin. On the Payment
     Date immediately following the Completion Release Date, the pagare shall be
     substituted to include the complete "Margin" language.

                  Exhibit A to Commercial Banks Loan Agreement



                                       -4-


Lenders), during which any amount payable by the Borrower hereunder is in
default. The first such period shall commence as of the date on which such
amount in default becomes due, and each such succeeding period shall commence
immediately upon the expiry of the immediately preceding period; provided,
however, that in the absence of, or pending consent of the Majority Bank
Lenders, each Default Interest Period has a duration of one month.

          "Eurodollar Business Day" means any day on which banks are generally
open for business in London, England.

          "First Payment Date" means the earlier of (i) the March 20 or the
September 20 next occurring after the Commercial Production Start-up Date, and
(ii) March 20, 2008.

          "Government Rule" means any statute, law, regulation, ordinance, rule,
judgment, decree, injunction, order, writ, decision, directive, environmental
guideline, policy, restriction or rule of common law, requirement of, or other
mandatory governmental restriction or any similar form of decision of or
determination by, any Governmental Authority, and authoritative interpretations
thereof, whether now or hereafter in effect, applicable from time to time to the
relevant person, property or transaction.

          "Governmental Authority" means any national, state, county, city,
town, village, municipal or other local governmental department, commission,
board, bureau, agency, authority or instrumentality of any nation that affects
or may affect the transactions contemplated hereby or any political subdivision
thereof, and any person exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any of the foregoing entities,
including, without limitation, all commissions, boards, bureaus, arbitrators and
arbitration panels, and any authority or other person controlled by any of the
foregoing.

          "Interest Payment Date" means, prior to the First Payment Date, each
September 20 and March 20 and, starting on the First Payment Date, each Payment
Date.

          "Interest Period" means any of the following periods:

               (i) on or prior to the First Payment Date, each period commencing
     on an Interest Payment Date (or with respect to the first Interest Period
     on the date hereof) and ending on the day immediately preceding the next
     succeeding Interest Payment Date (including the first day and the last day
     of such period); and

               (ii) thereafter, each period commencing on a Payment Date and
     ending on the day immediately preceding the next succeeding Payment Date
     (including the first day and the last day of such period).

          "Loan Agreement" means the Loan Agreement dated as of September 30,
2005 among the Borrower, CALYON NEW YORK BRANCH, MIZUHO CORPORATE BANK, LTD.,
THE BANK OF NOVA SCOTIA, and THE ROYAL BANK OF SCOTLAND PLC.

          "MPA" means the Master Participation Agreement dated as of September
30, 2005 entered into among the Borrower, Japan Bank For International
Cooperation, Sumitomo

                  Exhibit A to Commercial Banks Loan Agreement



                                       -5-


Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW, CALYON New
York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia, and Mizuho
Corporate Bank, Ltd.

          "MSA" means the Master Security Agreement dated as of September 30,
2005 entered into among the Borrower, Japan Bank For International Cooperation,
Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi, Ltd., KfW,
CALYON New York Branch, The Royal Bank of Scotland plc, The Bank of Nova Scotia,
Mizuho Corporate Bank, Ltd., Citibank, N.A., and Citibank del Peru S.A.

          "Other Amounts Default Rate" means the applicable Interest Rate
(including the Applicable Margin) plus 2% per annum.

          "Peruvian Income Tax Act" means the Legislative Decree 774 of December
31, 1993, as amended.

          "Principal Default Rate" means 2% per annum plus the greater of (i)
the Interest Rate (including the Applicable Margin) in effect immediately prior
to the date in which the respective principal amount became due and was not
paid, and (ii) the Base Rate for such Default Interest Period plus the
Applicable Margin.

          "Reference Banks" means, collectively CALYON New York Branch, Mizuho
Corporate Bank Ltd., Scotia Capital and The Royal Bank of Scotland plc, or such
substitute banks designated as such by CALYON New York Branch from time to time
to provide the quotations required for the determination of the Base Rate and
being the principal London offices of each such bank.

          "Sulfide Project" means the Borrower's development of a primary
sulfide portion of the ore body beneath the oxide portion of the ore body
currently in production at its Cerro Verde copper mine, located in the Districts
of Uchumayo and Yarabamba, Province of Arequipa, Peru.

          "Taxes" means any present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges.

          All payments by the Borrower of principal and interest hereunder shall
be made in dollars of the United States of America, in immediately available
funds, without deduction, set-off or counterclaim, to CALYON New York Branch for
the account of the Holder at account number ____________, favour ____________
maintained by CALYON, New York Branch (SWIFT code ____________) with
____________ (SWIFT code [________]), in New York, New York, not later than
11:00 a.m. New York time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Eurodollar Business Day).

          Any and all payments made by or on account of the Borrower in respect
of any obligation hereunder shall be made free and clear of, and without
deduction or withholding for or on account of, any and all present or future
Taxes (excluding (i) Taxes imposed on or measured

                  Exhibit A to Commercial Banks Loan Agreement



                                       -6-


by the net income, profits, or capital of the Holder by the jurisdiction under
the laws of which the Holder was incorporated or organized, (ii) Taxes which
would not have been imposed on the Holder but for a change by the Holder of its
lending office, (iii) Taxes which would not have been imposed on a Holder but
for the transfer by the Holder of an interest herein or (iv) Taxes which would
not have been imposed on a Holder but for such Holder's having a place of
business in the jurisdiction imposing the Tax (other than a place of business
arising from the transaction contemplated hereby or from having executed,
delivered, performed its obligations or received a payment hereunder, or
enforced its rights hereunder)), Taxes described in the immediately preceding
clauses (i) through (iv) being referred to herein as the "Excluded Taxes" and
Taxes other than the Excluded Taxes being referred to herein as "Indemnified
Taxes", now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority of the Republic of Peru, unless such deduction or
withholding is required by an applicable Government Rule, in which case the
following paragraph shall apply.

          If the Borrower shall be required by law to deduct any Indemnified
Taxes now or hereafter imposed, levied or collected, withheld or assessed by any
Governmental Authority of the Republic of Peru from or in respect of any sum
payable hereunder, the Borrower shall, at its option, either (i) pay to the
Holder in respect of which such deduction or withholding is required to be made,
such additional amount (the "Additional Tax Amount") as may be necessary so that
after all required deductions and withholdings (including, without limitation,
deductions and withholdings applicable to additional sums payable under this
paragraph), the Holder receives on the due date thereof an amount equal to the
sum it would have received, had no such deduction or withholding been made, or
(ii) assume the payment of the Indemnified Tax and pay directly the full amount
to the tax administration when due in accordance with Article 47 of the Peruvian
Income Tax Act, so that the amount paid to the Holder equals the amount it would
have received if the Borrower had not been required by law to deduct such
Indemnified Tax.

          The Borrower agrees to pay or reimburse upon demand in like manner and
funds, any and all documented costs and expenses of the Holder hereof or of the
Collateral Agent with respect to the enforcement of this Promissory Note.

          The Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of the Courts of Downtown Lima (Lima-Cercado) and of any Federal or
State court located in the Borough of Manhattan, The City of New York, as the
Holder hereof may elect for any proceeding arising out of or relating to this
Promissory Note. The Borrower waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding.

          The Parties further agree that, without prejudice to the law of the
State of New York governing the substantive obligations contained in the Loan
Agreement, which has originated this Promissory Note, all procedural matters or
formalities applicable to this Promissory Note to be recognized as such shall be
governed by and construed in accordance with Peruvian law.

          This Promissory Note is issued in Spanish and English. The Parties
agree that the applicable version of this Promissory Note will be (i) the
Spanish version in case the jurisdiction

                  Exhibit A to Commercial Banks Loan Agreement



                                       -7-


of the Courts of Downtown Lima (Lima-Cercado) is the jurisdiction elected by the
Holder, or be (ii) the English version in case the jurisdiction of any Federal
or State court located in the Borough of Manhattan, The City of New York is the
jurisdiction elected by the Holder. In case of discrepancies between the Spanish
and English versions (i) the Spanish version shall prevail when the Courts of
Downtown Lima (Lima-Cercado) or other Spanish speaking jurisdiction is the
jurisdiction elected by the Holder, and (ii) the English version shall prevail
when the Federal or State court located in the Borough of Manhattan, The City of
New York or any other non-Spanish speaking jurisdiction is the jurisdiction
elected by the Holder.

Lima, ____________

By: Sociedad Minera Cerro Verde, S.A.A.
Taxpayer Registry No.: 20170072465
Name of authorized officer: ____________
Identification Card No ____________
Power register in Entry No. ____________ of the Public Registry

                  Exhibit A to Commercial Banks Loan Agreement



                                                                       EXHIBIT B

                     AMORTIZATION SCHEDULE



              % of aggregate amount of all
Repayment   Advances made by the Lenders to
 Number                be repaid
- ---------   -------------------------------
         
     1                    6.25
     2                    6.25
     3                    6.25
     4                    6.25
     5                    6.25
     6                    6.25
     7                    6.25
     8                    6.25
     9                    6.25
    10                    6.25
    11                    6.25
    12                    6.25
    13                    6.25
    14                    6.25
    15                    6.25
    16                    6.25


                  Exhibit B to Commercial Banks Loan Agreement



                                                                       EXHIBIT C

                       ASSIGNMENT AND ACCEPTANCE AGREEMENT

          Reference is made to the Loan Agreement dated as of September 30, 2005
(as the same may be amended, supplemented or otherwise modified and in effect
from time to time, the "Loan Agreement"), among Sociedad Minera Cerro Verde
S.A.A., as Borrower, each of the Lenders named therein and [__________], as
Administrative Agent for the Lenders. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Loan Agreement.

          1. [__________] (the "Assignor") hereby sells and assigns to
[___________] (the "Assignee") without recourse to the Assignor, and the
Assignee hereby purchases and assumes from the Assignor without recourse to the
Assignor, effective as of the date set forth in Schedule 1 attached hereto (the
"Assignment Date"), the interests set forth on Schedule 1 hereto (the "Assigned
Interest") in the Assignor's rights and obligations under the Loan Agreement,
including, without limitation, the interests in the Commitment of the Assignor
on the Assignment Date and the Loans owing to the Assignor which are outstanding
on the Assignment Date as listed in Schedule 1 hereto, but excluding accrued
interest and fees to and excluding the Assignment Date. The assignment executed
hereby is made pursuant to and in accordance with Section 11.05(b) of the
Commercial Banks Loan Agreement. From and after the execution and delivery by
the Assignee to the Trustee and the Administrative Agent of this Assignment and
Acceptance Agreement, (a) the Assignee shall be a party to and be bound by the
provisions of the Loan Agreement, the Master Participation Agreement and each
other Financing Document the Assignor was party to and, to the extent of the
Assigned Interest, have the rights, obligations and benefits of a Lender
thereunder holding the Commitment and Loans (or portion(s) thereof) set forth on
Schedule 1 hereto and (b) the Assignor shall, to the extent of the Assigned
Interest, be released from the Commitment and Loans (or portion(s) thereof) so
assigned.

          2. The Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim, (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Master
Participation Agreement, the Loan Agreement, the other Financing Documents or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Master Participation Agreement, the Loan Agreement, the other
Financing Documents or any other instrument or document furnished pursuant
thereto and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of their obligations under the
Master Participation Agreement, the Senior Loan Documents, the other Financing
Documents or the Project Documents or any other instrument or document furnished
pursuant thereto.

          3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance, (b) confirms that it
has received a copy of the Master Participation Agreement, the Senior Loan
Documents, the other Financing Documents and such other documents and
information as it has deemed appropriate to make its own credit analysis

                  Exhibit C to Commercial Banks Loan Agreement



                                       -2-


and decision to enter into this Assignment and Acceptance, (c) agrees that it
will, independently and without reliance upon the Trustee, the Administrative
Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Senior Loan Documents,
the Master Participation Agreement and the other Financing Documents, (d)
appoints and authorizes the Administrative Agent and the Administrative Agent,
respectively, to take such action as agent (in their respective capacities as
Administrative Agent under the Master Participation Agreement and Administrative
Agent under the Commercial Banks Loan Agreement, respectively), on its behalf
and to exercise such powers and discretion under the Master Participation
Agreement, the Commercial Banks Loan Agreement and each other Financing Document
as are delegated to the Administrative Agent and the Administrative Agent,
respectively, by the terms thereof, together with such powers as are incidental
thereto, (e) agrees that it will be bound by the provisions of, and will perform
in accordance with their terms all of the obligations which by the terms of the
Master Participation Agreement, the Commercial Banks Loan Agreement, the
Promissory Notes and the other Financing Documents are required to be performed
by it as a Lender and (f) specifies as its lending offices (and address for
notices) the offices set forth beneath its name on the signature pages hereof.

          From and after the Assignment Date, the Trustee and the Administrative
Agent, as applicable, shall make all payments under the Financing Documents in
respect of the interest assigned hereby (including, without limitation, all
payments of principal, interest or distributions) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under the
Financing Documents for periods prior to the Assignment Date directly between
themselves.

          THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  Exhibit C to Commercial Banks Loan Agreement



                                       -3-


          IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                       [NAME OF ASSIGNOR]


                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------


                                       [NAME OF ASSIGNEE]


                                       By:
                                           -------------------------------------
                                       Name:
                                             -----------------------------------
                                       Title:
                                              ----------------------------------

                                       Lending Office (and address for notices):

                                       [Address]


Acknowledged this ______ day of
___________________, ____

[_____________________________],
    as Administrative Agent


By:
    --------------------------------
Name:
      ------------------------------
Title:
       -----------------------------

                  Exhibit C to Commercial Banks Loan Agreement



                                       -4-


                                   Schedule 1
                                       to
                            Assignment and Acceptance
                             Dated ___________, ____

Date of Assignment: _____________

Legal Name of Assignor: ____________________________

Legal Name of Assignee: ____________________________

Assignee's Address for Notices: ________________________________________________

Effective Date of Assignment ("Assignment Date")(1): ________________

Amount of Assigned Tranche A Interest: ________________

Assigned Tranche A Commitment: ________________
Assigned Tranche A Loans outstanding as of the Assignment Date: ________________

Assignor's Total Tranche A Commitment and Tranche A Loans Outstanding as of the
Assignment Date: ________________

Assignee's Total Tranche A Commitment and Tranche A Loans Outstanding as of the
Assignment Date: ________________

Amount of Assigned Tranche B Interest: ________________

Assigned Tranche B Commitment: ________________
Assigned Tranche B Loans outstanding as of the Assignment Date: ________________

Assignor's Total Tranche B Commitment and Tranche B Loans Outstanding as of the
Assignment Date: ________________

Assignee's Total Tranche B Commitment and Tranche B Loans Outstanding as of the
Assignment Date: ________________

- ----------
(1)  [Must be at least five Business Days after execution hereof by all required
     parties.]

                  Exhibit C to Commercial Banks Loan Agreement

EX-10.8

                                                                    Exhibit 10.8

                                                                  EXECUTION COPY

================================================================================

                            PARENT COMPANY GUARANTEE

                                     between

                            PHELPS DODGE CORPORATION

                                  as Guarantor

                                       and

                       SOCIEDAD MINERA CERRO VERDE S.A.A.

                               as Guaranteed Party

                         Dated as of September 30, 2005

================================================================================



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I DEFINITIONS AND INTERPRETATION.................................     1
   Section 1.01 Definitions..............................................     1
   Section 1.02 Interpretation...........................................     2

ARTICLE II GUARANTEE.....................................................     2
   Section 2.01 Guarantee of Obligor's Obligations.......................     2
   Section 2.02 Effectiveness and Term...................................     4
   Section 2.03 Payments.................................................     4

ARTICLE III CONSENT TO ASSIGNMENT........................................     4
   Section 3.01 Guaranteed Party May Assign to the Offshore
                Collateral Agent.........................................     4
   Section 3.02 Notice of Lenders' Reliance..............................     4
   Section 3.03 Offshore Collateral Agent to Receive Notice of Breach
                and Termination..........................................     5

ARTICLE IV REPRESENTATIONS AND WARRANTIES................................     5
   Section 4.01 Representations and Warranties of Guarantor..............     5

ARTICLE V CONSENT TO SUIT AND JURISDICTION...............................     6
   Section 5.01 Consent to Suit and Jurisdiction.........................     6
   Section 5.02 Guarantor's Agent for Service of Process.................     6

ARTICLE VI MISCELLANEOUS.................................................     6
   Section 6.01 Notices..................................................     6
   Section 6.02 Successors and Assigns...................................     7
   Section 6.03 Waiver of set-off........................................     7
   Section 6.04 Confidentiality..........................................     8
   Section 6.05 Execution in Counterparts................................     8
   Section 6.06 Amendments...............................................     8
   Section 6.07 Effectiveness............................................     8
   Section 6.08 No Trial by Jury.........................................     8
   Section 6.09 Severability.............................................     8
   Section 6.10 GOVERNING LAW............................................     8



                                       i



                            PARENT COMPANY GUARANTEE

          This PARENT COMPANY GUARANTEE ("Guarantee"), dated as of September 30,
2005, is made and entered into by Phelps Dodge Corporation, a company organized
under the laws of the State of New York ("Guarantor"), to and for the benefit of
Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta, listed on the
Lima Stock Exchange and organized under the laws of Peru ("Guaranteed Party").

                                     WHEREAS

     A. The Guaranteed Party owns the Cerro Verde copper mine, including a
copper leaching and solution extraction/electrowinning (SX/EW) operation,
located in the District of Uchumayo and Yarabamba, Province of Arequipa, Peru
(the "Mine");

     B. On June 1, 2005, the Guaranteed Party and Minera Phelps Dodge del Peru
S.A.C., a Peruvian sociedad anonima abierta, (the "Operator") have entered into
an Operator's Agreement pursuant to which the Operator provides management
services for the operation of the Mine and certain other services relating
thereto (the "Operator's Agreement");

     C. On the date hereof, the Guaranteed Party, Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank Ltd. have entered into a Master
Participation Agreement (the "Master Participation Agreement" or "MPA") which
sets forth various terms for the financing of the development of a primary
sulfide portion of the ore body beneath the oxide portion of the ore body
currently in production at the Mine (the "Sulfide Project"); and

     D. Guarantor, in consideration of the financing of the development of the
Sulfide Project by the Senior Lenders, has agreed to enter into this Guarantee
to guarantee the obligations of the Operator under the Operator's Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in reliance upon the representations and warranties of
the Guarantor set forth herein, the parties hereto (the "Parties"), intending to
be legally bound hereby, agree as follows:

                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

Section 1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to the Master Security Agreement dated as of
September 30, 2005 among Sociedad Minera Cerro Verde S.A.A., Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Citibank,



N.A., and Citibank del Peru (as amended from time to time, the "Master Security
Agreement" or "MSA").

Section 1.02 Interpretation. In this Guarantee, except to the extent that the
context otherwise requires:

          (a) the Table of Contents and Section headings are for convenience of
reference only and shall not affect the interpretation of this Guarantee;

          (b) unless otherwise specified, references to Articles, Sections,
clauses and Appendices are references to Articles, Sections and clauses of, and
Appendices to, this Guarantee;

          (c) references to any document or agreement, including this Guarantee,
shall be deemed to include references to such document or agreement as amended,
supplemented or replaced and in effect from time to time in accordance with its
terms and subject to compliance with the requirements set forth herein and
therein;

          (d) references to any party to this Guarantee or any other document or
agreement or to any other Person shall include its successors and permitted
assigns;

          (e) when used in this Guarantee, the words "including", "includes" and
"include" shall be deemed to be followed in each instance by the words "without
limitation";

          (f) when used in this Guarantee, the words "herein", "hereby",
"hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and words of
similar import, shall refer to this Guarantee in its entirety and not to any
particular section, subsection, paragraph, clause or other subdivision, exhibit,
schedule or appendix of this Guarantee; and

          (g) when used herein, the singular shall include the plural, the
plural shall include the singular and the use of any gender shall include all
genders, unless the context requires otherwise.

                                   ARTICLE II
                                    GUARANTEE

Section 2.01 Guarantee of Obligor's Obligations.

          (a) Guarantor hereby irrevocably, unconditionally and absolutely
guarantees to the Guaranteed Party the punctual and full performance and payment
(as primary and joint obligor and not merely as surety) of each and every
obligation of the Operator and of any directly or indirectly wholly-owned
affiliate of Guarantor that succeeds to the obligations of Operator under the
Operator's Agreement, a "Guaranteed Successor" and, collectively with the
Operator, an "Obligor", each such obligation a "Guaranteed Obligation" and,
collectively, the "Guaranteed Obligations", in each case whether now existing or
hereafter existing or due or to become due, so long as such Guaranteed
Obligations are not performed or paid by the Obligor when and as


                                        2



performance or payment, as the case may be, of the same shall become due,
whether at maturity, upon acceleration or otherwise, pursuant to the terms of
the Operator's Agreement.

          (b) Guarantor agrees that its obligations under this Section 2.01
shall be unconditional and irrevocable, irrespective of (i) the invalidity or
unenforceability of the Guaranteed Obligations, (ii) the absence of any action
to enforce the Guaranteed Obligations against the Obligor, (iii) any amendment,
waiver or consent by the Guaranteed Party with respect to any provision of the
Operator's Agreement, (iv) the recovery of any judgment against the Obligor or
any action to enforce the same, (v) the insolvency or bankruptcy of the Obligor
or (vi) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor or surety.

          (c) Guarantor hereby waives (i) diligence, presentment, demand of
payment, protest, notice and all demands whatsoever with respect to any
Guaranteed Obligation, (ii) filing of claims with a court in the event of
insolvency or bankruptcy of the Obligor and (iii) any right to require a
proceeding first against the Obligor or against any other Person under any
guarantee of, or security for, any Guaranteed Obligation.

          (d) Guarantor agrees that its obligations under this Article II with
respect to any Guaranteed Obligation will not be discharged except by complete
performance or payment by Obligor or by Guarantor of such Guaranteed Obligation.
In the event that any payment made by Obligor to the Guaranteed Party in respect
of any Guaranteed Obligation is rescinded or must otherwise be returned for any
reason whatsoever, such payment shall be treated as a Guaranteed Obligation and
Guarantor shall remain liable for such Guaranteed Obligation to the extent
provided herein as if such payment had not been made and,

               (x) if Guarantor's obligations under this Parent Company
     Guarantee have been terminated in accordance with this Guarantee, such
     obligations shall be reinstated to the extent necessary for the Guarantor
     to comply with the foregoing provisions of this sentence,

               (y) Guarantor agrees that it will pay or reimburse the Guaranteed
     Party within 30 days of written request for all reasonable and documented
     costs and expenses (including reasonable and documented fees and
     disbursements of counsel) incurred by the Guaranteed Party in connection
     with the rescission or restoration of this Parent Company Guarantee,
     including any such costs and expenses incurred in defending against any
     claim alleging that any payment constituted a preference, fraudulent
     transfer or similar payment under any bankruptcy, insolvency or similar
     law.

          (e) Guarantor agrees that the Guaranteed Party may at any time and
from time to time, either before or after the maturity thereof, without notice
to or further consent of Guarantor, extend the time of performance or payment
of, exchange or surrender, or fail to act hereunder or under any other agreement
or to perfect, collateral for, or renew any of the Guaranteed Obligations owed
to it, and may also make any agreement with the Obligor, for the extension,
renewal, payment, compromise, discharge or release thereof, in whole or in part,
or for


                                        3



any modification of the terms thereof, without in any way impairing or affecting
the obligations of the Guarantor pursuant to this Article II.

Section 2.02 Effectiveness and Term. The guarantee provided in this Article II
is a continuing guarantee and shall apply to all Guaranteed Obligations whenever
arising. This Guarantee shall terminate upon the earlier of (i) full payment of
all Senior Facility Loan Obligations owed to the Senior Facility Lenders, (ii)
the date of termination of the Operator's Agreement, or (iii) the date as of
which neither the Operator nor any Guaranteed Successor is a party to the
Operator's Agreement, provided, that in the event of a termination pursuant to
this clause (ii) or (iii), this Guarantee shall survive until all Guaranteed
Obligations arising prior to such date have been performed, paid or otherwise
discharged in full (x) in the event of a performance or payment by Obligor, in
accordance with the provisions of the Operator's Agreement and (y) in the event
of a performance or payment by Guarantor, in accordance with this Guarantee.

Section 2.03 Payments. With respect to payments to be made by Guarantor under
this Guarantee, all such payments shall be made in the currency in which such
payment was required to be made by Obligor, by the deposit of immediately
available funds by wire transfer into the Proceeds Account. All payments
required to be made by Guarantor hereunder shall be made in accordance with the
same terms as if made by the Obligor under the Operator's Agreement.
Accordingly, the obligation of Guarantor for payment under this Guarantee shall
be discharged solely by payment in the manner provided herein and not by payment
to any other Person or at any other place.

                                   ARTICLE III
                              CONSENT TO ASSIGNMENT

Section 3.01 Guaranteed Party May Assign to the Offshore Collateral Agent.
Guaranteed Party shall be entitled to grant, transfer and assign to the Offshore
Collateral Agent, as collateral agent for the benefit of the Senior Lenders
named in the Master Security Agreement, all right, title and interest which
Guaranteed Party now has or which shall hereafter arise in and to this Guarantee
and all amounts due and to become due to Guaranteed Party hereunder or in
respect hereof and all claims resulting from any failure of performance or
compliance with any of the provisions of this Guarantee, together with full
power and authority, in its own name or in the name of Guaranteed Party or
otherwise, to enforce and request payment under this Guarantee against Guarantor
and to collect, receive and give receipts and releases for such amounts.
Guarantor hereby irrevocably consents to such grant, transfer and assignment
and, in the event of a Borrower Enforcement Action, to the exercise by the
Offshore Collateral Agent (on behalf of the Senior Lenders) of its rights as a
secured party in accordance with Section 3.02(a)(i) of the Master Security
Agreement. Guarantor hereby irrevocably further agrees for the benefit of the
Offshore Collateral Agent (on behalf of the Senior Lenders) to make any and all
payments required hereunder or in respect hereof directly to the Proceeds
Account and agrees that the place of payment shall be of the essence under this
Guarantee.

Section 3.02 Notice of Lenders' Reliance. Guarantor acknowledges that the
Offshore Collateral Agent has notice of and is relying on this Guarantee and,
accordingly, that Guarantor's


                                        4



obligations hereunder are directly enforceable against it by the Offshore
Collateral Agent, acting on behalf of the Senior Lenders pursuant to a Borrower
Enforcement Direction, as third party beneficiary of and assignee under this
Guarantee.

Section 3.03 Offshore Collateral Agent to Receive Notice of Breach and
Termination. Guarantor agrees that the Offshore Collateral Agent shall be given
prompt written notice of any material breach, termination or claim of
termination of this Guarantee.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

Section 4.01 Representations and Warranties of Guarantor. Guarantor represents
and warrants to Guaranteed Party that:

          (a) Organization. It is a corporation duly organized, validly existing
and is in good standing under the laws of the State of New York.

          (b) Authority. It has full power and authority to execute and deliver
this Guarantee and to perform its obligations hereunder in accordance with the
terms provided herein.

          (c) Binding Agreement. This Guarantee has been duly authorized,
executed and delivered by it and constitutes a valid and legally binding
agreement, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.

          (d) Consents and Approvals for this Guarantee. All Governmental
Approvals which are necessary for the execution and delivery by it of this
Guarantee and the performance of its obligations hereunder have been obtained
and are in full force and effect.

          (e) Conflicts. There is no provision of law, statute, regulation,
rule, order, injunction, decree, writ or judgment, no provision of its
organizational documents and no provision of any mortgage, indenture, contract
or agreement binding on it or affecting its properties, which would prohibit,
conflict with or in any way prevent its execution, delivery, or performance of
the terms of this Guarantee.

          (f) No Immunity. It does not have any immunity from jurisdiction of
any court or from any legal process (whether through service, notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise).

          (g) Litigation. There is no action, suit, proceeding or investigation,
at law or in equity, or before any Governmental Authority or other Person,
pending or, to the best knowledge of Guarantor, threatened, against or affecting
Guarantor or its assets that (i) questions the validity of this Guarantee or any
action taken or to be taken pursuant hereto or thereto, or (ii) in any case or
in the aggregate would reasonably be expected to result in a material adverse
effect on the ability of Guarantor to perform its obligations hereunder.


                                        5



          (h) Ranking. Its obligations under this Guarantee shall rank pari
passu with all other unsecured obligations of Guarantor.

                                    ARTICLE V
                        CONSENT TO SUIT AND JURISDICTION

Section 5.01 Consent to Suit and Jurisdiction. Guarantor hereby irrevocably
consents and agrees, for the benefit of the Guaranteed Party and the Offshore
Collateral Agent, that any legal action, suit or proceeding against it with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Guarantee may be brought in any Federal or State
court located in New York County in the City of New York and hereby irrevocably
accepts and submits to the non-exclusive jurisdiction of such court with respect
to any such action, suit or proceeding. Guarantor hereby waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions, suits or proceedings, brought in any such court and hereby
further waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum.

Section 5.02 Guarantor's Agent for Service of Process. Guarantor hereby
irrevocably appoints CT Corporation, with offices at the date of this Guarantee
at 111 Eighth Avenue, New York, NY 10011, U.S.A., as Guarantor's authorized
agent on which any and all legal process may be served in any such action, suit
or proceeding brought by or on behalf of the Guaranteed Party or the Offshore
Collateral Agent in the United States Federal courts located in the Borough of
Manhattan, The City of New York or the courts of the State of New York located
in the Borough of Manhattan, The City of New York. Guarantor agrees that service
of process in respect of it upon such agent, together with written notice of
such service given as provided in Section 6.01, shall be deemed to be effective
service of process upon it in any such action, suit or proceeding. Guarantor
agrees that the failure of such agent to give notice to it of any such service
shall not impair or affect the validity of such service or any judgment rendered
in any action, suit or proceeding based thereon. If for any reason such agent
shall cease to be available to act as such, Guarantor agrees that it shall
designate a new agent in the Borough of Manhattan, The City of New York on the
terms and for the purposes of this Article V. Nothing herein shall in any way be
deemed to limit the ability of the Offshore Collateral Agent to serve any such
legal process in any other manner permitted by applicable law or to obtain
jurisdiction over the Guarantor or bring actions, suits or proceedings against
it in such other jurisdictions, and in such manner, as may be permitted by
applicable law.

                                   ARTICLE VI
                                  MISCELLANEOUS

Section 6.01 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given when
delivered in writing or sent by facsimile transmission (with written
confirmation of receipt, which confirmation may be by facsimile transmission) to
a Party


                                        6



at its address and facsimile transmission number as indicated below or to such
other address as may be furnished for this purpose by such Party at:

     If to Guarantor, at:

          Phelps Dodge Tower
          1 North Central Avenue
          Phoenix, Arizona 85004
          U.S.A.
          Attention: Treasurer
          Telephone: (602) 366-8100
          Facsimile: (602) 366-8150

     If to Guaranteed Party at:

          SOCIEDAD MINERA CERRO VERDE S.A.A.
          c/o Asiento Minero Cerro Verde
          Uchumayo (Arequipa/Peru), Casilla Postal #299
          Shipping: Av. Alfonso Ugarte #304
          Cercado, Arequipa, Republic of Peru
          Attention: General Manager
          Telecopier (Fax): 054-28-33-76

     If to the Offshore Collateral Agent, at:

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013
          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

or at such other address as any Party shall have specified by notice to the
other Parties in accordance with this Section.

Section 6.02 Successors and Assigns. This Guarantee shall be binding upon and
inure to the benefit of the Guarantor and the Guaranteed Party and their
respective successors and assigns. Except as set forth in Article III, the
Parties may not assign or transfer any of their rights or obligations under this
Guarantee without the prior written consent of the other party.

Section 6.03 Waiver of set-off. Guarantor hereby agrees, for the benefit of the
Offshore Collateral Agent that the obligations of Guarantor to pay amounts due
hereunder shall not be subject to any counterclaim, set-off, deduction or
defense against Guaranteed Party by reason of any claim that Guarantor may have
against Guaranteed Party arising out of a transaction that is not a subject of
this Guarantee.


                                        7



Section 6.04 Confidentiality. Each Party shall maintain the confidentiality of
the terms and contents of this Guarantee and shall not disclose the terms and
contents of this Guarantee to any third parties except (a) with the prior
consent of the other Party, (b) as may be required to satisfy an audit by public
accountants during a review of the financial condition and/or statements of
either Party, (c) as required by law or court order or (d) that such terms and
contents may be disclosed to prospective (direct and indirect) lenders and to
the parties to the MSA.

Section 6.05 Execution in Counterparts. This Guarantee may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.

Section 6.06 Amendments.

          (a) Neither this Guarantee nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
the Guaranteed Party, the Guarantor and the Offshore Collateral Agent.

          (b) No waiver by the Guaranteed Party of any of its rights, powers and
privileges under this Guarantee shall be effective other than pursuant to a
written instrument executed by the Guaranteed Party and the Offshore Collateral
Agent waiving such right, power or privilege.

Section 6.07 Effectiveness. This Guarantee shall come into full force and effect
upon its execution and delivery by each of the Parties.

Section 6.08 No Trial by Jury. Each Party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Guarantee or the transactions
contemplated hereby.

Section 6.09 Severability. If any provision of this Guarantee shall be invalid,
illegal or unenforceable, the parties hereto agree to the fullest extent they
may effectively do so that the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

Section 6.10 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


                                        8



          IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to
be duly executed as of the day and year first above written.

                                        PHELPS DODGE CORPORATION,

                                        Guarantor


                                        By /s/ Stanton K. Rideout
                                           -------------------------------------
                                        Name: Stanton K. Rideout
                                        Title: Vice President & Treasurer


AGREED AND ACCEPTED AS OF THE DATE FIRST SET FORTH ABOVE:

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.,

                                        Guaranteed Party


                                        By /s/ Cristian Moran
                                           -------------------------------------
                                        Name: Cristian Moran
                                        Title: Attorney in Fact


                                        9

EX-10.9

                                                                    Exhibit 10.9

                                                                  EXECUTION COPY

================================================================================

                            PARENT COMPANY GUARANTEE

                                     between

                            PHELPS DODGE CORPORATION
                                  as Guarantor

                                       and

                       SOCIEDAD MINERA CERRO VERDE S.A.A.
                               as Guaranteed Party

                         Dated as of September 30, 2005

================================================================================



                                Table of Contents



                                                                            Page
                                                                            ----
                                                                         
                                    ARTICLE I

                         DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions.................................................     2
Section 1.02 Interpretation..............................................     2

                                   ARTICLE II

                                    GUARANTEE
Section 2.01 Guarantee of Obligor's Obligations..........................     2
Section 2.02 Effectiveness and Term......................................     4
Section 2.03 Payments....................................................     4

                                   ARTICLE III

                              CONSENT TO ASSIGNMENT
Section 3.01 Guaranteed Party May Assign to the Offshore Collateral
             Agent.......................................................     4
Section 3.02 Notice of Lenders' Reliance.................................     5
Section 3.03 Offshore Collateral Agent to Receive Notice of Breach and
             Termination.................................................     5

                                   ARTICLE IV

                         Representations and Warranties
Section 4.01 Representations and Warranties of Guarantor.................     5

                                    ARTICLE V

                        CONSENT TO SUIT AND JURISDICTION
Section 5.01 Consent to Suit and Jurisdiction............................     6
Section 5.02 Guarantor's Agent for Service of Process....................     6

                                   ARTICLE VI

                                  Miscellaneous
Section 6.01 Notices.....................................................     7
Section 6.02 Successors and Assigns......................................     8
Section 6.03 Waiver of set-off...........................................     8
Section 6.04 Confidentiality.............................................     8



                                        i



                            Table of Contents (con't)



                                                                            Page
                                                                            ----
                                                                         
Section 6.05 Execution in Counterparts...................................     8
Section 6.06 Amendments..................................................     8
Section 6.07 Effectiveness...............................................     8
Section 6.08 No Trial by Jury............................................     8
Section 6.09 Severability................................................     9
Section 6.10 GOVERNING LAW...............................................     9



                                       ii



                            PARENT COMPANY GUARANTEE

          This PARENT COMPANY GUARANTEE ("Guarantee"), dated as of September 30,
2005, is made and entered into by Phelps Dodge Corporation, a company organized
under the laws of the State of New York ("Guarantor"), to and for the benefit of
Sociedad Minera Cerro Verde S.A.A., a sociedad anonima abierta, listed on the
Lima Stock Exchange and organized under the laws of Peru ("Guaranteed Party").

                                     WHEREAS

     A. The Guaranteed Party owns the Cerro Verde copper mine, including a
copper leaching and solution extraction/electrowinning (SX/EW) operation,
located in the District of Uchumayo and Yarabamba, Province of Arequipa, Peru
(the "Mine");

     B. On the date hereof, the Guaranteed Party and Phelps Dodge Sales Company
Incorporated (the "Obligor") have entered into a concentrate sales agreement
pursuant to which the Guaranteed Party has agreed to sell, and the Obligor has
agreed to purchase, 20% (which percentage shall in certain circumstances be
increased) of the Guaranteed Party's annual projected copper Concentrate
production up to the earlier of the Final Maturity Date and the date the Senior
Facility Loans are fully repaid (the "Concentrate Sales Agreement");

     C. On the date hereof, the Guaranteed Party and the Obligor have entered
into a cathodes sales agreement pursuant to which the Guaranteed Party has
agreed to sell, and the Obligor has agreed to purchase 70% (which percentage
shall in certain circumstances be increased) of the Guaranteed Party's annual
actual production of Cathodes up to the earlier of the Final Maturity Date and
the date the Senior Facility Loans are fully repaid (the "Cathodes Sales
Agreement");

     D. On the date hereof, the Guaranteed Party, Japan Bank for International
Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi,
Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland plc, The Bank of
Nova Scotia and Mizuho Corporate Bank Ltd. have entered into a Master
Participation Agreement (the "Master Participation Agreement" or "MPA") which
sets forth various terms for the financing of the development of a primary
sulfide portion of the ore body beneath the oxide portion of the ore body
currently in production at the Mine (the "Sulfide Project"); and

     E. Guarantor, in consideration of the financing of the development of the
Sulfide Project by the Senior Lenders, has agreed to enter into this Guarantee
to guarantee the obligations of the Obligor under the Concentrate Sales
Agreement and the Cathodes Sales Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and in reliance upon the representations and warranties of
the Guarantor set forth herein, the parties hereto (the "Parties"), intending to
be legally bound hereby, agree as follows:



                                    ARTICLE I
                         DEFINITIONS AND INTERPRETATION

Section 1.01 Definitions. Unless the context shall otherwise require, or unless
otherwise defined herein, capitalized terms used herein shall have the meanings
assigned to them in Schedule Z to the Master Security Agreement dated as of
September 30, 2005 among Sociedad Minera Cerro Verde S.A.A., Japan Bank for
International Cooperation, Sumitomo Mitsui Banking Corporation, The Bank of
Tokyo-Mitsubishi, Ltd., KfW, Calyon New York Branch, The Royal Bank of Scotland
plc, The Bank of Nova Scotia, Mizuho Corporate Bank, Ltd., Citibank, N.A., and
Citibank del Peru (as amended from time to time, the "Master Security Agreement"
or "MSA").

Section 1.02 Interpretation. In this Guarantee, except to the extent that the
context otherwise requires:

          (a) the Table of Contents and Section headings are for convenience of
reference only and shall not affect the interpretation of this Guarantee;

          (b) unless otherwise specified, references to Articles, Sections,
clauses and Appendices are references to Articles, Sections and clauses of, and
Appendices to, this Guarantee;

          (c) references to any document or agreement, including this Guarantee,
shall be deemed to include references to such document or agreement as amended,
supplemented or replaced and in effect from time to time in accordance with its
terms and subject to compliance with the requirements set forth herein and
therein;

          (d) references to any party to this Guarantee or any other document or
agreement or to any other Person shall include its successors and permitted
assigns;

          (e) when used in this Guarantee, the words "including", "includes" and
"include" shall be deemed to be followed in each instance by the words "without
limitation";

          (f) when used in this Guarantee, the words "herein", "hereby",
"hereunder", "hereof", "hereto", "hereinbefore", and "hereinafter", and words of
similar import, shall refer to this Guarantee in its entirety and not to any
particular section, subsection, paragraph, clause or other subdivision, exhibit,
schedule or appendix of this Guarantee; and

          (g) when used herein, the singular shall include the plural, the
plural shall include the singular and the use of any gender shall include all
genders, unless the context requires otherwise.

                                   ARTICLE II
                                    GUARANTEE

Section 2.01 Guarantee of Obligor's Obligations.


                                       2



          (a) Guarantor hereby irrevocably, unconditionally and absolutely
guarantees to the Guaranteed Party the punctual and full performance and payment
(as primary and joint obligor and not merely as surety) of each and every
obligation of the Obligor under the Concentrate Sales Agreement and the Cathodes
Sales Agreement (each such obligation a "Guaranteed Obligation" and,
collectively, the "Guaranteed Obligations") in each case whether now existing or
hereafter existing or due or to become due, so long as such Guaranteed
Obligations are not performed or paid by the Obligor when and as performance or
payment, as the case may be, of the same shall become due, whether at maturity,
upon acceleration or otherwise, pursuant to the terms of the Concentrate Sales
Agreement or the Cathodes Sales Agreement, as the case may be.

          (b) Guarantor agrees that its obligations under this Section 2.01
shall be unconditional and irrevocable, irrespective of (i) the invalidity or
unenforceability of the Guaranteed Obligations, (ii) the absence of any action
to enforce the Guaranteed Obligations against the Obligor, (iii) any amendment,
waiver or consent by the Guaranteed Party with respect to any provision of the
Concentrate Sales Agreement or the Cathodes Sales Agreement, (iv) the recovery
of any judgment against the Obligor or any action to enforce the same, (v) the
insolvency or bankruptcy of the Obligor or (vi) any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor or surety.

          (c) Guarantor hereby waives (i) diligence, presentment, demand of
payment, protest, notice and all demands whatsoever with respect to any
Guaranteed Obligation, (ii) filing of claims with a court in the event of
insolvency or bankruptcy of the Obligor and (iii) any right to require a
proceeding first against the Obligor or against any other Person under any
guarantee of, or security for, any Guaranteed Obligation.

          (d) Guarantor agrees that its obligations under this Article II with
respect to any Guaranteed Obligation will not be discharged except by complete
performance or payment by Obligor or by Guarantor of such Guaranteed Obligation.
In the event that any payment made by Obligor to the Guaranteed Party in respect
of any Guaranteed Obligation is rescinded or must otherwise be returned for any
reason whatsoever, such payment shall be treated as a Guaranteed Obligation and
Guarantor shall remain liable for such Guaranteed Obligation to the extent
provided herein as if such payment had not been made and,

               (x) if Guarantor's obligations under this Parent Company
     Guarantee have been terminated in accordance with this Guarantee, such
     obligations shall be reinstated to the extent necessary for the Guarantor
     to comply with the foregoing provisions of this sentence,

               (y) Guarantor agrees that it will pay or reimburse the Guaranteed
     Party within 30 days of written request for all reasonable and documented
     costs and expenses (including reasonable and documented fees and
     disbursements of counsel) incurred by the Guaranteed Party in connection
     with the rescission or restoration of this Parent Company Guarantee,
     including any such costs and expenses incurred in defending against any
     claim alleging that any payment constituted a preference, fraudulent
     transfer or similar payment under any bankruptcy, insolvency or similar
     law.


                                       3



          (e) Guarantor agrees that the Guaranteed Party may at any time and
from time to time, either before or after the maturity thereof, without notice
to or further consent of Guarantor, extend the time of performance or payment
of, exchange or surrender, or fail to act hereunder or under any other agreement
or to perfect, collateral for, or renew any of the Guaranteed Obligations owed
to it, and may also make any agreement with the Obligor, for the extension,
renewal, payment, compromise, discharge or release thereof, in whole or in part,
or for any modification of the terms thereof, without in any way impairing or
affecting the obligations of the Guarantor pursuant to this Article II.

Section 2.02 Effectiveness and Term. The guarantee provided in this Article II
is a continuing guarantee and shall apply to all Guaranteed Obligations whenever
arising. This Guarantee shall terminate upon the earlier of (i) full payment of
all Senior Facility Loan Obligations owed to the Senior Facility Lenders and
(ii) the later of the date of termination of the Concentrate Sales Agreement and
the Cathodes Sales Agreement, provided that, in the case of a termination
pursuant to this clause (ii), this Guarantee shall survive until all Guaranteed
Obligations arising prior to such date have been performed, paid, or otherwise
discharged in full (x) in the event of a performance or payment by Obligor, in
accordance with the provisions of the Concentrate Sales Agreement and the
Cathodes Sales Agreement and (y) in the event of a performance or payment by
Guarantor, in accordance with this Guarantee.

Section 2.03 Payments. With respect to payments to be made by Guarantor under
this Guarantee, all such payments shall be made in the currency in which such
payment was required to be made by Obligor, by the deposit of immediately
available funds by wire transfer into the Proceeds Account as set forth in
Section 10 of the Concentrate Sales Agreement and Section 12 of the Cathodes
Sales Agreement or in any other account designated in accordance with the
procedures set forth therein. All payments required to be made by Guarantor
hereunder shall be made in accordance with the same terms as if made by the
Obligor under the Concentrate Sales Agreement and the Cathodes Sales Agreement.
Accordingly, the obligation of Guarantor for payments under this Guarantee shall
be discharged solely by payment in the manner provided in Section 10 of the
Concentrate Sales Agreement and Section 12 of the Cathodes Sales Agreement and
not by payment to any other person or at any other place, unless otherwise
required by order of a court of competent jurisdiction.

                                   ARTICLE III
                              CONSENT TO ASSIGNMENT

Section 3.01 Guaranteed Party May Assign to the Offshore Collateral Agent.
Guaranteed Party shall be entitled to grant, transfer and assign to the Offshore
Collateral Agent, as collateral agent for the benefit of the Senior Lenders
named in the Master Security Agreement, all right, title and interest which
Guaranteed Party now has or which shall hereafter arise in and to this Guarantee
and all amounts due and to become due to Guaranteed Party hereunder or in
respect hereof and all claims resulting from any failure of performance or
compliance with any of the provisions of this Guarantee, together with full
power and authority, in its own name or in the name of Guaranteed Party or
otherwise, to enforce and request payment under this Guarantee against Guarantor
and to collect, receive and give receipts and releases for such amounts.
Guarantor hereby irrevocably consents to such grant, transfer and assignment
and, in the event of a


                                       4



Borrower Enforcement Action, to the exercise by the Offshore Collateral Agent
(on behalf of the Senior Lenders) of its rights as a secured party in accordance
with Section 3.02(a)(i) of the Master Security Agreement. Guarantor hereby
irrevocably further agrees for the benefit of the Offshore Collateral Agent (on
behalf of the Senior Lenders) to make any and all payments required hereunder or
in respect hereof directly to the Proceeds Account in accordance with Section
2.03 and agrees that the place of payment shall be of the essence under this
Guarantee.

Section 3.02 Notice of Lenders' Reliance. Guarantor acknowledges that the
Offshore Collateral Agent has notice of and is relying on this Guarantee and,
accordingly, that Guarantor's obligations hereunder are directly enforceable
against it by the Offshore Collateral Agent, acting on behalf of the Senior
Lenders pursuant to a Borrower Enforcement Direction, as third party beneficiary
of and assignee under this Guarantee.

Section 3.03 Offshore Collateral Agent to Receive Notice of Breach and
Termination. Guarantor agrees that the Offshore Collateral Agent shall be given
prompt written notice of any material breach, termination or claim of
termination of this Guarantee.

                                   ARTICLE IV
                         Representations and Warranties

Section 4.01 Representations and Warranties of Guarantor. Guarantor represents
and warrants to Guaranteed Party that:

          (a) Organization. It is a corporation duly organized, validly existing
and is in good standing under the laws of the State of New York.

          (b) Authority. It has full power and authority to execute and deliver
this Guarantee and to perform its obligations hereunder in accordance with the
terms provided herein.

          (c) Binding Agreement. This Guarantee has been duly authorized,
executed and delivered by it and constitutes a valid and legally binding
agreement, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.

          (d) Consents and Approvals for this Guarantee. All Governmental
Approvals which are necessary for the execution and delivery by it of this
Guarantee and the performance of its obligations hereunder have been obtained
and are in full force and effect.

          (e) Conflicts. There is no provision of law, statute, regulation,
rule, order, injunction, decree, writ or judgment, no provision of its
organizational documents and no provision of any mortgage, indenture, contract
or agreement binding on it or affecting its properties, which would prohibit,
conflict with or in any way prevent its execution, delivery, or performance of
the terms of this Guarantee.


                                       5



          (f) No Immunity. It does not have any immunity from jurisdiction of
any court or from any legal process (whether through service, notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise).

          (g) Litigation. There is no action, suit, proceeding or investigation,
at law or in equity, or before any Governmental Authority or other Person,
pending or, to the best knowledge of Guarantor, threatened, against or affecting
Guarantor or its assets that (i) questions the validity of this Guarantee or any
action taken or to be taken pursuant hereto or thereto, or (ii) in any case or
in the aggregate would reasonably be expected to result in a material adverse
effect on the ability of Guarantor to perform its obligations hereunder.

          (h) Ranking. Its obligations under this Guarantee shall rank pari
passu with all other unsecured obligations of Guarantor.

                                    ARTICLE V
                        CONSENT TO SUIT AND JURISDICTION

Section 5.01 Consent to Suit and Jurisdiction. Guarantor hereby irrevocably
consents and agrees, for the benefit of the Guaranteed Party and the Offshore
Collateral Agent, that any legal action, suit or proceeding against it with
respect to its obligations, liabilities or any other matter under or arising out
of or in connection with this Guarantee may be brought in any Federal or State
court located in New York County in the City of New York and hereby irrevocably
accepts and submits to the non-exclusive jurisdiction of such court with respect
to any such action, suit or proceeding. Guarantor hereby waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions, suits or proceedings, brought in any such court and hereby
further waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought therein has been brought in an inconvenient
forum.

Section 5.02 Guarantor's Agent for Service of Process. Guarantor hereby
irrevocably appoints CT Corporation, with offices at the date of this Guarantee
at 111 Eighth Avenue, New York, NY 10011, U.S.A., as Guarantor's authorized
agent on which any and all legal process may be served in any such action, suit
or proceeding brought by or on behalf of the Guaranteed Party or the Offshore
Collateral Agent in the United States Federal courts located in the Borough of
Manhattan, The City of New York or the courts of the State of New York located
in the Borough of Manhattan, The City of New York. Guarantor agrees that service
of process in respect of it upon such agent, together with written notice of
such service given as provided in Section 6.01, shall be deemed to be effective
service of process upon it in any such action, suit or proceeding. Guarantor
agrees that the failure of such agent to give notice to it of any such service
shall not impair or affect the validity of such service or any judgment rendered
in any action, suit or proceeding based thereon. If for any reason such agent
shall cease to be available to act as such, Guarantor agrees that it shall
designate a new agent in the Borough of Manhattan, The City of New York on the
terms and for the purposes of this Article V. Nothing herein shall in any way be
deemed to limit the ability of the Offshore Collateral Agent to serve any such
legal process in any other manner permitted by applicable law or to obtain
jurisdiction over the Guarantor or bring actions, suits or proceedings against
it in such other jurisdictions, and in such manner, as may be permitted by
applicable law.


                                       6



                                   ARTICLE VI
                                  Miscellaneous

Section 6.01 Notices. Any notice, request, demand, consent, designation,
direction, instruction, certificate, report or other communication to be given
hereunder shall be given in the English language and will be duly given when
delivered in writing or sent by facsimile transmission (with written
confirmation of receipt, which confirmation may be by facsimile transmission) to
a Party at its address and facsimile transmission number as indicated below or
to such other address as may be furnished for this purpose by such Party at:

     If to Guarantor, at:

          Phelps Dodge Tower
          1 North Central Avenue
          Phoenix, Arizona 85004
          U.S.A.
          Attention: Treasurer
          Telephone: (602) 366-8100
          Facsimile: (602) 366-8150

     If to Guaranteed Party at:

          SOCIEDAD MINERA CERRO VERDE S.A.A.
          c/o Asiento Minero Cerro Verde
          Uchumayo (Arequipa/Peru), Casilla Postal #299
          Shipping:  Av. Alfonso Ugarte #304
          Cercado, Arequipa, Republic of Peru
          Attention: General Manager
          Telecopier (Fax): 054-28-33-76

          with copies to:

          PHELPS DODGE SALES COMPANY, INCORPORATED
          One North Central Avenue
          Phoenix, Arizona 85004
          U.S.A.
          Fax: (602) 366-7305
          Attn: Senior Vice President, PD Sales

     If to the Offshore Collateral Agent, at:

          Citibank N.A.
          Citibank Agency & Trust
          388 Greenwich Street
          14th Floor
          New York, NY 10013


                                       7



          Attention: Jenny Cheng
          Telephone: 212 816 5648
          Facsimile: 212 816 5530

or at such other address as any Party shall have specified by notice to the
other Parties in accordance with this Section.

Section 6.02 Successors and Assigns. This Guarantee shall be binding upon and
inure to the benefit of the Guarantor and the Guaranteed Party and their
respective successors and assigns. Except as set forth in Article III, the
Parties may not assign or transfer any of their rights or obligations under this
Guarantee without the prior written consent of the other party.

Section 6.03 Waiver of set-off. Guarantor hereby agrees, for the benefit of the
Offshore Collateral Agent that the obligations of Guarantor to pay amounts due
hereunder shall not be subject to any counterclaim, set-off, deduction or
defense against Guaranteed Party by reason of any claim that Guarantor may have
against Guaranteed Party arising out of a transaction that is not a subject of
this Guarantee.

Section 6.04 Confidentiality. Each Party shall maintain the confidentiality of
the terms and contents of this Guarantee and shall not disclose the terms and
contents of this Guarantee to any third parties except (a) with the prior
consent of the other Party, (b) as may be required to satisfy an audit by public
accountants during a review of the financial condition and/or statements of
either Party, (c) as required by law or court order or (d) that such terms and
contents may be disclosed to prospective (direct and indirect) lenders and to
the parties to the MSA.

Section 6.05 Execution in Counterparts. This Guarantee may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all the counterparts shall together constitute one and the same instrument.

Section 6.06 Amendments.

          (a) Neither this Guarantee nor any terms hereof may be amended,
supplemented or modified other than pursuant to a written instrument executed by
the Guaranteed Party, the Guarantor and the Offshore Collateral Agent.

          (b) No waiver by the Guaranteed Party of any of its rights, powers and
privileges under this Guarantee shall be effective other than pursuant to a
written instrument executed by the Guaranteed Party and the Offshore Collateral
Agent waiving such right, power or privilege.

Section 6.07 Effectiveness. This Guarantee shall come into full force and effect
upon its execution and delivery by each of the Parties.

Section 6.08 No Trial by Jury. Each Party hereby waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Guarantee or the transactions
contemplated hereby.


                                       8



Section 6.09 Severability. If any provision of this Guarantee shall be invalid,
illegal or unenforceable, the parties hereto agree to the fullest extent they
may effectively do so that the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

Section 6.10 GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


                                       9



          IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to
be duly executed as of the day and year first above written.

                                        PHELPS DODGE CORPORATION,

                                        Guarantor


                                        By /s/ Stanton K. Rideout
                                           -------------------------------------
                                        Name: Stanton K. Rideout
                                        Title: Vice President & Treasurer

AGREED AND ACCEPTED AS OF THE DATE FIRST SET FORTH ABOVE:

                                        SOCIEDAD MINERA CERRO VERDE S.A.A.,

                                        Guaranteed Party


                                        By /s/ Cristian Moran
                                           -------------------------------------
                                        Name: Cristian Moran
                                        Title: Attorney in Fact


                                       10

EX-11

PHELPS DODGE CORPORATION AND SUBSIDIARIES

Exhibit 11

COMPUTATION OF PER SHARE EARNINGS
(Unaudited; $ in millions except per share data)

						Nine Months Ended
	Third Quarter					September 30,
	2005		2004			2005			2004
Net income	$	366.1		292.9			1,435.1			705.2
Preferred stock dividends		—		(3.3	)		(6.8	)		(10.1	)
Net income applicable to common shares	$	366.1		289.6			1,428.3			695.1
Basic:
Average number of common shares outstanding		98.6		93.8			96.8			92.8
Diluted:
Average number of common shares outstanding		98.6		93.8			96.8			92.8
Common stock equivalents — stock options		0.3		1.1			0.4			1.2
Common stock equivalents — restricted stock		0.4		0.3			0.4			0.4
Conversion of mandatory convertible preferred stock		2.1		4.2			3.5			4.2
Diluted average number of common shares outstanding		101.4		99.4			101.1			98.6
Basic earnings per share	$	3.71		3.09			14.75			7.49
Diluted earnings per share	$	3.61		2.95			14.19			7.15

EX-12

PHELPS DODGE CORPORATION AND SUBSIDIARIES

Exhibit 12

COMPUTATION OF TOTAL DEBT TO TOTAL CAPITALIZATION
($ in millions)

	September 30,			December 31,
	2005			2004
Short-term debt	$	31.1			78.8
Current portion of long-term debt		43.0			45.9
Long-term debt		656.6			972.2
Total debt		730.7			1,096.9
Minority interests in consolidated subsidiaries		897.0			555.1
Shareholders’ equity		5,824.3			4,343.1
Total capitalization	$	7,452.0			5,995.1
Ratio of total debt to total capitalization		9.8	%		18.3	%

EX-15

Exhibit 15

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Commissioners:

We are aware that our report dated October 25, 2005 on our review of the interim financial information of Phelps Dodge Corporation (the “Company”) for the three-month and nine-month periods ended September 30, 2005 and 2004 and included in the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2005 is incorporated by reference in its Registration Statements on Form S-3 (Nos. 333-104627, 333-67606, 333-61624, 333-43890 and 333-124094), Registration Statement and Post-Effective Amendment No. 1 on Form S-3 (Nos. 33-44380 and 333-36415), Registration Statements on Form S-8 (Nos. 33-26442, 33-6141, 33-26443, 33-29144, 33-19012, 2-67317, 33-34363, 33-34362, 33-62648, 333-117382, 333-42231 and 333-52175) and the Post-Effective Amendment No. 4 on Form S-8 to the Registration Statement on Form S-4 (No. 333-86061).

Very truly yours,

/s/ PricewaterhouseCoopers LLP
Phoenix, Arizona
October 27, 2005

EX-31

Exhibit 31

CERTIFICATION
Pursuant to Rule 13a-14(a) of the Exchange Act

I, J. Steven Whisler, Chairman and Chief Executive Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Phelps Dodge Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-(f)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

-1-

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2005

/s/ J. Steven Whisler

J. Steven Whisler

Chairman and Chief Executive Officer

I, Ramiro G. Peru, Executive Vice President and Chief Financial Officer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Phelps Dodge Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

-2-

(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 27, 2005

/s/ Ramiro G. Peru

Ramiro G. Peru

Executive Vice President and Chief Financial Officer

-3-

EX-32

Exhibit 32

CERTIFICATION
Pursuant to 18 United States Code § 1350

     The undersigned hereby certifies that, to his knowledge, the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005 of Phelps Dodge Corporation (the “Company”) filed with the Securities and Exchange Commission on the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ J. Steven Whisler
Name:	J. Steven Whisler
Title:	Chairman and Chief Executive Officer
Date:	October 27, 2005

     The undersigned hereby certifies that, to his knowledge, the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2005 of Phelps Dodge Corporation (the “Company”) filed with the Securities and Exchange Commission on the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ Ramiro G. Peru
Name:	Ramiro G. Peru
Title:	Executive Vice President and Chief Financial Officer
Date:	October 27, 2005